government to shut down loss making companies with name of companies, ayoog niti, reasons, history, public sector undertaking, why the company reforms ?, bad impact of shut down companies , conclusion

2.  A state owned enterprise in India is called
public sector undertaking.
 These companies are owned by union
government of India.
 In a PSU majority ( 51%or more) of the paid
up share capital is held by central or state
governments.
 The comptroller and auditor general of india
audits government companies.

3. CAG has the power to appoint the
auditor and to direct the manner in
which the auditor shall audit the
company’s accounts.
The company stock needs to be
majority owned by the government to
be a public sector undertakings.

4.  Niti Aayog suggests closure of 8 sick PSUs
 The Aayog had submitted two separate lists
of sick and loss-making PSUs – one comprising
those that can be closed down and the other
of those where government can divest its
stake.
 It is also in the process of preparing a list of
PSUs for strategic sale or privatisation.

5.  Out of 74,the Aayog had suggested
status quo in case of two PSUs, strategic
disinvestment of 10, with option for
strategic disinvestment 22.
 Transfer of ownership of three.
 Long term lease of six.
 Closure of 26.

6.  One pertains to decision regarding sick
firms which have been making losses.
 The second is disinvestment, or strategic
sale where government wants to reduce
its stake.

7.  Government has set a disinvestment target of Rs
56,500 crore for this fiscal.
 Of this, Rs 36,000 crore is to come from minority
stake sale in PSUs and Rs 20,500 crore from
strategic sale.
 Government kickstarted the disinvestment
programme for the current fiscal with 11.36 per
cent stake sale in NHPC. The government raised
Rs 2,700 crore through the process

8. o It has lined up as many as 15 PSUs, including Coal
India, NMDC, MOIL, MMTC, National Fertilisers,
NALCO and Bharat Electronics, for stake sale in
current fiscal.
o During 2015-16, the government managed to notch
up Rs 25,312 crore through disinvestment, less than
half the target of Rs 69,500 crore.
o It had raised around Rs 24,500 crore in 2014-15 by
selling stake in public companies; about Rs 16,000
crore in 2013-14 and Rs 23,960 crore in 2012-13.
o It had raised around Rs 14,000 crore in 2011-12 and
over Rs 22,100 crore in 2010-11.

9.  The year was 1930. The Great Depression had hit
hard the world’s wealthiest and the mightiest nation,
the United States of America.
 During one of those challenging times, Directors on
the board of the iconic US carmaker, the Ford Motors,
assembled for a closed-door meeting to discuss their
strategy for the revival of the company which was
suffering huge losses.
 During the marathon meeting, the majority agreed to
shut down the company’s loss-making plants to tide
over the crisis.

10.  However, one Director who was opposed to shutting
down the plants said sarcastically, “Why not close down
the business. You will save lots of cost and would make
more sense.”
 The other Directors realized the validity of his argument
and the rest as they say is history. The Ford Motors
survived the worst global recession and today it is a
leader of the international automobile industry.
 Almost nine decades after and thousands of miles away
in India, the success story of the Ford Motors holds its
relevance and can act as a guiding light for the
Government to restore the glory of public sector
undertakings which are losing their lustre.

11.  At a time when the Narendra Modi
Government is putting emphasis on turning
around the country’s manufacturing sector
through its ambitious Make in India project,
voices are being raised in various quarters to
privatise the non-profitable PSUs.
 Recently the Niti Aayog also submitted to the
PMO a list of 74 sick and loss-making CPSEs
for closing them down and strategic sales.

12.  Top officials of various State-run companies
tell Bureaucracy Today that it is a case of “too
many cooks spoiling the broth” in the CPSEs in
India.
 Though the Government has put various “check
posts” in the form of Central Vigilance
Commission, Committee on Public Undertakings
and Independent Directors “to maintain the
balance” in PSUs, they sometimes “act as
extraconstitutional authorities in the CPSEs”, the
CMD of a Miniratna PSU says on condition of
anonymity.

13. NO FREEDOM TO CMDs
 Several PSU Chairmen and Managing Directors to
whom Bureaucracy Today spoke have unanimously cited
“administrative freedom with applied conditions
entrusted on CMDs” as the major deterrent for the PSUs
to perform and make the Make in India project
successful.
INDEPENDENT DIRECTORS
 Insiders opine that though Independent
Directors are required to keep checks and
balances in private companies, especially in the
light of the Satyam Computers and Sahara
companies scandals, at times they “become
extraconstitutional authorities in CPSEs and try
to extract their pound of flesh”.

14. FUNCTIONAL DIRECTORS CAN BECOME A
LIABILITY
Since Functional Directors are appointed by the
Appointments Committee of the Cabinet (ACC), the
CMD even after knowing everything cannot take any
action against the defiant FDs.
TUSSLE BETWEEN CVOs AND CMDs
False complaints against CMDs are a great
menace in CPSEs, especially when the PSU head
is a hard taskmaster and insists on self-discipline,
social discipline and office discipline, opine
another PSU head.

15. ‘GOVT BUSINESS NOT EASY’
 The relation between the CAG and a CPSE
“should not be like that between a fisherman
and fish but it should be like the one between a
pond and fish”. Auditors should work honestly
but at the same time they must “infuse
confidence” among CPSE employees as
“Government business is not very easy in the era
of globalization, privatization and
liberalization”.
THE WAY FORWARD
 The PSU heads say privatisation is not the
solution to turn around the public sector
undertakings many of which have excellent
technical and human resources. The solution,
they say, lies in putting the house in order.

16. There are three distinct reasons it could be a
positive.
 The market is reacting now.
 The GOP will get blamed.
 A shutdown will bring outsiders off the
sidelines and start exerting pressure now.

17.  First, Federal employees were furloughed for
a combined total of 6.6 million days, more
than in any previous government shutdown.
 Second, the shutdown cost the Federal
government billions of dollars.
 Third, the shutdown had significant negative
effects on the economy.

18.  Fourth, the shutdown impacted millions of
Americans who rely on critical programs and
serviceshalted by the shutdown. For
example:
a) Hundreds of patients were prevented from
enrolling in clinical trials at the National
Institutes of Health.
b) Almost $4 billion in tax refunds were
delayed.

19.  Fifth, the shutdown could have a long-term
impact on our ability to attract and retain
the skilled and driven workforce that the
Federal government needs.

20.  Public Sector offering Job security is not a
myth yes it does provide a security for your
family and appears to be a recurring source
of income.