India’s central public sector enterprises have
undergone a cycle of transformation since the
introduction of liberal economic policies a couple
of decades ago.
Many believed that the public sector
enterprises will simply wither away because of
competition and their inefficiency; or they will be
subsumed by the private sector because of the
However, as the experience has shown, the
Central Public Sector Enterprises (CPSEs) continue
to have a critical role to play in many businesses,
especially in the strategic sectors.
Many CPSEs have proved their critics wrong by
becoming extremely efficient and competitive.
In the strategic sectors of our economy, CPSEs are
needed to ensure that the national and the social
priorities are guaranteed – in terms of assured
supply and affordable prices.
Infrastructure, energy, healthcare, defence
are such areas where it cannot be left entirely to
In fact, the CPSEs are needed to create,
balance and sustain the market in these sectors.
Even in the business and consumer services
sector, the CPSEs are needed to ensure adequate and
fair competition and stabilize the market.
However, at the same time, the CPSEs cannot take
such role for granted for future also.
They cannot be allowed to become complacent.
Efficient and effective management is
essential to ensure that the CPSEs continue to
fulfill their obligations to the country.
Indian CPSEs need to be competitive at home
against the global competitors and become
By striving to become multinationals, Indian
CPSEs will be following the best management and
operational benchmarks in the world, making it
easier for them to be competitive at home and also
in global arena.
Most of CPSEs are profitable despite operating with
the constraints of public service priorities.
Of the 248 CPSEs, 220 are currently
operational and of those 158 are profitable.
That is an impressive 70 per cent plus mark
for a group that also includes a large number of
legacy companies taken over as sick private sector
The operating efficiency of the CPSEs is also quite
good in the prevailing dullness in the economy.
Last year, i.e. 2010-11, CPSEs delivered
dividend of Rs. 35,681 crore.
Importantly, there has been significant
improvement in the revenue and profitability levels
of the CPSEs.
So, the CPSEs are making a substantial
contribution to the country’s economic growth.
Even on the stockmarkets, the listed 45 odd
CPSEs make nearly 20 per cent of the value of all
listed Indian stocks.
Clearly, Indian public sector has the size
and the efficiency to entertain ambitions of going
The CPSEs can also build and be parts of global
In doing so, they can achieve an edge in
technological and managerial innovation and help
Indian economy grow at a faster rate.
Already, many Indian CPSEs are global giants.
Most of the petroleum PSEs are now
multinationals and helping secure energy fuels for
now and the future.
In the heavy engineering, infrastructure and
project services too, Indian CPSEs have significant
Now, the power sector CPSEs are set to spread
out in the world.
Given their experience of working in resource
constrained and politically obstructive environment,
Indian CPSEs are well equipped to do business in the
other developing parts of the world, particularly
Southeast Asia and Africa.
The Government has taken steps to help the Central
Public Sector Enterprises (CPSEs) to improve their
operations and competitiveness at home.
The Maharatana and Navaratna CPSEs have been
allowed to invest in assets overseas and undertake
joint ventures abroad.
The CPSEs are continuing to invest even in the
Much of this money is being invested in the
critical sectors such as energy and infrastructure.
This investment will have a multiplier effect
on the economy.
Also, a significant part of the fresh
investment this year is going into capacity building
This investment has been made possible by the
CPSEs strong performance during the past few years,
which have yielded adequate cash surpluses for
The government has also allowed the CPSEs to
use their cash surpluses to buy others’ stocks in
order to aggregate their complementary strengths.
Steps have also been taken to improve efficiency of
Majority of the CPSEs have been signing MOUs
with the Government which cover not only the
financial results but also the outcomes in areas
such as corporate governance, research and
development and corporate social responsibility.
A vast majority of the MOU signing CPSEs have
been meeting or exceeding their targets.
A comprehensive review of the MOU system is
underway and revamped MOU system would be put in
The Government has also been taking steps through,
the Board for Reconstruction of Public Sector
Enterprises (BRPSE) and Government approved revival
packages to ensure that the performance of
loss-making CPSEs could be improved.
We are also taking new initiatives such as
enhancement of the age of superannuation from 58 to
60 years and grant of 1997 pay scales to the
employees of sick and loss-making CPSEs as these
steps can give them the incentive to make extra
effort to get out of the red.
Even as the CPSEs move towards becoming globally
competitive and going global, they still have to
play their role as the catalysts of development and
The CPSEs will continue to go to hinterlands
to seed industries there and they will continue to
invest in creating employment and economic
opportunities for the deprived.
The government would like the CPSEs to
integrate India’s rural economy into the mainstream.
However, it is upto the CPSEs themselves to
continue to prove their relevance and they will
survive only if the public sees them performing a
useful function and only if they can compete with
the best in the world at home and overseas.
Autonomy and more freedom are crucial for achieving
In fact freedom is not complete if it does
not include freedom to commit mistakes and take
Keeping this in view, it is the Government’s
endeavour to enhance freedom and autonomy to CPSE
management and an exercise in this direction has
already begun. (PIB Features.)
*With Inputs from M/o Heavy Industries &