Public Sector Undertakings (PSUs): Growth Engines of the Nation

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When in May 2014, new government, led by iconic leadership of Hon’ble Prime Minister Narendra Modi took charge of the affairs of the country, Indian economy was in a really bad shape and country’s financial infrastructure was marred by menace of corruption. On one hand global financial situation was posing a mammoth threat for the country’s economy and on the other hand country’s own fiscal situation was at tenterhooks as fiscal deficit and inflation were at alarming levels, thereby putting enormous pressure on Rupee and GDP numbers. At that time a regressive strategy has been coined by the Union Government and key Flagship and Revolutionary programs like “Make In India”, Opening up of Various sector for FDI, Smart City Mission, Digital India, Ujjwala Yojana, Ujala Yojana, Mudra Bank etc. were launched to change the economic landscape of the country.

Also a crackdown on blackmoney in the form of Demonetization has lead to great boost to the formal economy on one hand and increase in government exchequer on the other, helping Modi Government to increase the funding of critical infrastructure and developmental schemes. Importantly number of income tax return filed have increased by whooping 24.7% for FY17 to 2.82 crore as against 2.26 crore filed for FY16. Interestingly advance tax collection also grew by around 42% as of August 5. But the masterstroke by PM Modi came in the form of biggest tax reform after independence, i.e. GST (Goods and Services Tax). Promoted as “One Nation One Tax,” this tax reform is slated to change the whole face of Indian economy and if we go by the assessment of experts, Indian GDP would get a boost of 1.5 to 2 % easily in near future.

After three years of reining in of the Modi Government it can well be said that country is on right path and foundation seems quite strong for the economy and it is handsomely placed for a perfect launch into new paradigm. In fact when global economies were struggling to put their efforts together, Indian economy surpassed everybody to become the fastest growing economy of the world with 7.1% GDP growth during FY17. Interestingly, this was despite the “chemotherapy” treatment of Demonetization during last November. World bank assessment is that Indian economy would bounce back in FY18 and benefits of Demonetization would be seen in the years to come.

At this moment, if we look back then we find that Indian economy is moving ahead at a subtle pace despite various hiccups both in and outside of the country and Indian Industrial and Manufacturing space remained buoyant even during the troublesome period of last 10 years, since financial meltdown in 2008. So what are the reasons for that…..?

Though it is quite difficult to pinpoint one reason for such a fabulous performance, but surely this performance has been put by those companies, which has often been shunned by their private counterparts as “inefficient and indifferent” organisation working in monopolistic environment and are in complete control of Government i.e. Central Public Sector Enterprises (CPSEs). Despite being categorised as inefficient for almost last 6 decades and working under so many controls and regulations, there are numerous examples among these CPSEs, which have graduated into global corporations.

There is another facet to this. Since independence PSUs have prominently contributed in the infrastructure, industrial and manufacturing development of the country as they have entered into those sectors, in which no other corporate would dare to enter due to unfeasibility of projects on the standards of profit making, particularly in infrastructure, roads, railways, airport, power plants etc.

In my view, they may be “inefficient” in putting profit motive before nation building, but many companies like ONGC, NTPC, GAIL, Coal India, BHEL, IOC, REC and PFC have successfully challenged the profitability and income credentials of private companies and today even become the industry benchmark for the private players. CPSEs have significant market-shares in sectors such as petroleum, (e.g. ONGC, GAIL, HPCL, BPCL and Indian Oil Corporation), mining (e.g. Coal India Ltd. and NMDC), power generation (e.g. NTPC and NHPC), power transmission (e.g. Power Grid Corporation of India Ltd.), nuclear energy (e.g. Nuclear Power Corporation of India Ltd.), heavy engineering (e.g. BHEL), aviation (e.g. Hindustan Aeronautics Ltd. and Air India Ltd.), storage and public distribution (e.g. Food Corporation of India and Central Warehousing Corporation), shipping and trading (e.g. Shipping Corporation of India Ltd, and State Trading Corporation of India Ltd.), steel (e.g. Steel Authority of India Ltd and Rashtriya Ispat Nigam Ltd) and telecommunication (e.g. BSNL and MTNL).

Interestingly there are 320 CPSEs presently exists with 29 new CPSEs formed during FY16 and out of which 244 are in operation. Rest 76 are under construction. If we go by sheer size and absolute numbers then during FY16 total turnover of all CPSEs stood at Rs.18,54,667 crore compared to Rs.19, 95,176 crore in the previous year showing a decrease of 7.04 per cent, while, overall net profit of the 244 operating CPSEs went up by 12.54% to whooping 1,15,767 crore in FY16 from 1,02,866 crore in FY15. Importantly, During FY16 the number of profit making CPSEs have increased to 165 from 159 CPSEs in previous year.

Governance Democracy & Politics (GDP) Magazine always remained to be the torchbearer of the media fraternity that always regards the performances of these Kohinoors of Modern India at a high pedestal and building a positive perception about them at the bourses and on ground as well. In fact taking that effort ahead, last year we brought the first of its kind coveted handbook “Annual PSU Handbook 2015: Kohinoors of India.”

Taking that journey forward we are proud to present to you the second edition of this state of the art Annual PSU Handbook 2017: “PSUs: Growth Engines of the Nation”. This coveted annual publication is another effort of GDP family to give much more exposure to CPSEs and give information about their performance to investors, policy makers, bureaucrats and common man so that they can take informed decision about them.

This annual publication by Team GDP will put forward the real performance of CPSEs in a very lucid, concise and logical manner so that it can be used by many people as a ready reckoner for CPSEs (listed as well unlisted) and PSUs Banks as well. We sincerely think that our effort in realizing this product would prove beneficial for various stakeholders of the CPSEs and will make it an interesting read. We will also be honoured to have your feedback on this flagship product.

Amit Bhanot

Managing Editor

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