“The foremost challenge of Indian PSEs today is to increase their competitiveness to deal with market forces”. This was stated by Shri Pranab Mukherjee, President of India, while inaugurating the Global PSE Summit organized by the Confederation of Indian Industry and the Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises in New Delhi on December 12-13.

The President of India observed that the Government had already undertaken a number of measures to help the PSEs become more competitive. These included providing the PSEs with managerial and commercial autonomy through the scheme of Maharatnas, Navaratnas and Miniratnas. He, however, felt that this was not enough and more reforms needed to be undertaken. One such reform could be to allow listing of more PSEs on stock exchanges when the market is stable would augur well for transparency and accountability. According to the President, this would allow millions of small and large shareholders to participate in the ownership of these enterprises and this in turn would encourage the PSE’s to better their own performance.

The President stressed on the need for PSE’s to focus on technology development and innovation, develop new products and processes, enter new markets and serve new customers in order to promote growth.

He also suggested that the less successful PSEs need to emulate the business practices of the more successful ones especially in areas such as human resources and skill upgradation.

The President felt that the PSEs could set an example for the private sector in the area of CSR as this has now been made mandatory for all enterprises under the provisions of the new Companies Act. He suggested that the public sector and private sector could develop a strong supply chain that would help give a boost to the Indian economy.

The President also called upon the PSE’s to develop strategies to seize the commanding heights of the global economy and in this connection, step up their engagement with the rest of the world. He felt that Indian PSEs could benefit by learning from the experience of PSEs in other countries and adapting these learnings in the Indian context.

While addressing the session, Mr. Praful Patel, Minister for Heavy Industries and Public Enterprises, Government of India stated that the PSEs have laid a strong foundation for the industrial development of the country. He observed that the both the public and private sectors were now moving hand in hand to contribute to the economic development of the country. Referring to the contribution of PSEs in India’s overall development, he felt that many parts of India would have remained underdeveloped had the public sector not ventured into those areas.

The Minister observed that several reforms had been undertaken that to ensure greater autonomy and flexibility for the PSEs. Referring to the commonly held belief that most PSUs were loss making entities, the Minister was of the view that the performance of PSU’s was on par with that of the private sector. Only 66 Central PSUs were sicjk and steps were taken to restructure some have yielded positive results in making some of these companies profitable once again.

In his address, Mr. O P Rawat, Secretary, Department of Public Enterprises, Ministry of Heavy Industry and Public Enterprises, Government of India stated that his department was trying to set down guidelines to improve the governance of PSEs in line with global best practices. He also observed that there was a need to review the performance of the PSEs and allow them to withdraw from areas that are better served by the private sector. He stated that facilitating such painless exits was the need of the hour.

According to Mr. B P Rao, Chairman, CII Council on PSEs and Chairman and Managing Director, BHEL stated that PSEs continued to operate under multiple constraints. While the Government had taken several policy initiatives to strengthen the Public Sector, there are some of the issues which need attention in terms of Corporate Governance, Vigilance mechanism, Human Resource Strategy, Joint ventures, Partnerships, Procurement Policy, etc.  He requested the government to take steps to address these areas to be able to create a level playing field with their counterparts in the private sector.

In his address, Mr. S Gopalakrishnan, President, CII observed that that the Roongta and Arjun Sengupta Committees had examined issues such as corporate governance and effective partnerships with private sector. He observed that the Cabinet has already processed the Roongta Committee recommendations and has demonstrated its support through steps such as fixing the tenure of three years for chief executives of companies to improve accountability, transparency and efficiency. These, he felt were good reforms. He stated that that Article 12 was restrictive to the competitiveness of PSUs. The PSUs must be treated as commercial entities. He urged the Government to take a hard look at it. He also suggested that there is a need to look at the models of governance that have been successful across the world and in India and attempt to replicate them.

Mr. Gopalakrishnan called for the unlocking of PSE assets, both in terms of physical assets and human assets. He was of the view that this would bring huge resources into the ambit of the national exchequer and raise productivity of units that are currently stagnant due to various circumstances.

In his welcome remarks, Mr. Chandrajit Banerjee, Director General, CII highlighted the important role played by PSEs in CII and stated that the Public sector enterprises are a formidable force of the economy, and an integral part of CII.

Mr. M Narayana Rao, Chairman, Steering Committee for CII Global PSE Summit and Chairman and Managing Director, Mishra Dhatu Nigam Ltd. Delivered the vote of thanks.