PSUs: True Soldiers Of Indian Economy


Growth of Indian economy is considered quite vital not only for the wellbeing of Indian citizen and creation of jobs but for the world as well, as India, due to its mammoth consumption power and strong demographic profile considered as a “sweet spot” of Global Economy. What is more encouraging is that despite a bleak global economic scenario of increasing crude prices and tumbling Rupee against Dollar, Indian government is trying hard to put India’s growth engine back on track via various initiatives like Implementation of GST, Make in India, Mudra Bank Initiative, various reforms, liberalization of FDI limits in various sensitive sectors like defense, manufacturing, insurance etc. Also crackdown against black money in the form of Demonetization in 2016 has now started showing positive results, as tax payers filing returns have increased by whooping 80% and went up from 3.8 crore in May 2014 to 6.86 crore as of now.

These initiatives have started giving fabulous results as India has surpassed France as the sixth largest economy of the world and with 7.3% growth in FY18, became the fastest growing large economy across the globe. Another facet of India’s growth and proactive governance was that country has improved its ranking in the much important “ease of doing business rankings” as it jumped whooping 23 places to 77 spot among 190 countries that clearly shows the untiring efforts of Modi Government to improve upon the business environment in the country. Importantly India was at 130 rank in 2016 in this coveted ranking.

But when we decipher the reasons for such a sustainable growth of Indian economy, along with all the efforts of government and factors visible, there is another space that is working tirelessly and silently pushing up GDP in a sustainable manner. A silent revolution of sorts, as this sector is consistently performing since independence and carried on the developmental agenda in areas like Electricity, Heavy and Critical engineering, Crude and Petroleum, telecommunication, Finance, Steel etc., which always remained critical for the development of the country. Today we know this sector with the name of CPSEs or Central Public Sector Enterprises.

During my 15 years of career in financial journalism, I have got ample opportunities to meet various corporate honchos, market evangelists and top notch business thinkers from across the corporate spectrum of India, be it private sector, MNCs or Public Sector Undertakings. With my experience I have seen that the leader of any business organization has his/her own niche thoughts and an astounding vision towards his organization’s growth in future. This clarity in the corporate vision obviously seem more structured in the case of any private organization and MNCs, as they are very clear about their profitability and return they would get from the capital employed. But as far as, accountability or social responsibility is concerned towards the country, citizen, exchequer and environment, these “less important” topics always take a back seat for them.

On the other hand there is another breed of corporate gems whose vision is just the opposite. These are government controlled Public Sector Undertakings or PSUs. Ironically, they are also profit earning business organizations but when it comes to prioritize their responsibilities, then first comes their accountability towards country, Government, citizen, exchequer, environment and above all towards the society. Only after satisfying these priorities, PSUs also have the mandate to earn pro t and rewarding the investors. Just because of this basic difference in the nature and perception of these organizations as compared to their private sector counterparts, PSUs are often lamented as inefficient, slow moving and indifferent organizations and capital markets do not give them the deserving valuation. I categorically remembered classic assertion of a former CMD of BHEL, Mr. BP Rao…. “Business environment in India for PSUs is like that, our hands and legs are all tied up and we have been asked to run and compete with the private sector. Interestingly for last 6-7 decades, we are running faster than them (private sector), still bourses are not giving proper
valuation to us. I don’t understand the reason.”

Strange but true the preposterous valuations that private enterprises enjoy despite the dismal state of their fundamentals and compare them
with the miserably low valuations that our Public Sector Enterprises get; the gap is appalling indeed! This is despite the fact that the PSUs have always chalked the path that no other organization dared to take, as it was most risky. Be it ONGC, IOC, NTPC, BHEL, GAIL or Bharat Broadband Network (BBNL), all of these organizations were set up to make India grow and utilize its natural resources for nation building. This was all the more important post independence, considering that we have been a resource rich country plundered by the marauders of the west for over a century. When we took charge of our own destiny, putting in place whatever was left and effectively utilizing it to put the nation on a growth path suddenly became more vital than ever. The best way for the government to do this was to create its own enterprises, which would ensure better utilization as well as control.

From where it began to where it stands today, the public sector has really come a long way. But the point remains, are we valuing it optimally? Does the valuation of the public sector enterprises respect their true worth? Looked upon as mere puppets in the hands of the ministries, PSUs have a negative perception in the outside world that prove to be a major stumbling block for their managements.

Alas, the perception is changing… thanks to the current government under the iconic leadership of PM Shri Narendra Modi proper freedom has been given to PSUs and their board to carve their own destiny, giving them level playing field. Most commendable decision came in the form of “Make in India” initiative, where these “Super Corporations” can contribute immensely, helping Indian manufacturing sector. Also PM Modi has unshackled PSUs Banks from political interference altogether, particularly in loan disbursement process, helping them in a big way. The Government recognizes the real worth of these gems and has huge plans for their disinvestment & strategic sale so that more professional management and practices could be added into these organizations. This will surely change the perception about these juggernauts.

Governance Democracy & Politics (GDP) has been actively supporting these gems of India Inc., particularly in helping them discover their real worth. Taking that effort ahead, we are bringing the Third Edition of its coveted PSU handbook “3rd Annual PSU Handbook 2018: Building Blocks of New India.” This handbook from GDP seeks to bring out the best of the PSU world in one concise publication. It can be used as a ready reckoner for information on Indian PSU’s (listed as well unlisted) to all the stakeholders and prove to be an interesting read for everybody.

Amit Bhanot

Managing Editor

Governance Democracy & Politics (GDP)


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