The fate of some Public Sector Undertakings (PSUs) in India hangs in balance as government officials discuss proposals to shut down some loss-making state-owned companies.
With the total net loss recorded at ₹245 billion ($4 billion) in 2012, which has only worsened, cabinet secretary Ajit Seth on Tuesday called a meeting of top officials to discuss the fate of 10 firms which have been making biggest losses.
Some of these PSUs, including Air India, BSNL, ONGC, SAIL, Hindustan Photofilms, Hindustan Fertilisers Corporation and HMT have been consistently bleeding cash and have survived only on budgetary allocations.
The Central government runs around 260 PSUs besides thousands of state-government owned firms which manufacture various types of consumer goods.
HMT: Last week, the government ordered to shut down HMT Watches and HMT Chinar Watches due to their continued losses since 2000. The company posted a loss of ₹242 crore in 2012-13. At the end of March 2012, the company was deep in debt worth ₹694.52 crore.
ONGC: In May, ONGC accused Reliance of 'stealing gases' and claimed a loss of ₹30,000 crore within less than a year of signing a memorandum with Reliance Industries. Following the loss ONGC took Mukesh Ambani's Reliance to court over gas theft, reported TOI. ONGC worried that Reliance drew gas secretly from its Krishna Godavari-D6 block.
BSNL: State-run telecom company incurred a loss of ₹14,979 crore in landline services during 2013-14, where as its overall loss was recorded at ₹7,085 crore.
Air India: This airline has been incurring losses and is trying to refuel its pockets via heavy discounts on fare prices. The state-run carrier halved its operating loss in the financial year. It suffered a loss of ₹2,120 crore in 2013-14, down from ₹3,800 crore in 2012.
Hindustan Photofilms: Incorporated in 1960, the company was well-known for making film rolls with Kodak as one of its brands. It was recommended for shut down in 2003 as it could not compete with other private players. The company approached the courts which gave a stay order on its closure. Its overall losses are around ₹82.33 billion rupees which is about 40 times its paid-up capital.
"There is no future for this company in the current environment. It is a fit case for winding down," an official from the Department of Public Enterprises told Reuters on conditions of anonymity.
PSU Employees Fate:
Before winning the Lok Sabha elections, Narendra Modi in April voiced his opinion on not closing down the PSUs citing example of his home state Gujarat. Modi said that the Gujarat state electricity board had an annual deficit of ₹2,500 crore, but by deploying professional and technological upgradations, the firm improved its efficiency and stopped incurring losses, reported Niti Central.
Employees have opposed the shutting down of state firms and Bhartiya Mazadoor Sangh (BMS) said it would join other unions in blocking the move.
"We are co-ordinating with all central trade unions on the matter. We are fortunate that all trade unions are on the same page when it comes to these issues," Vrijesh Upadhyaya, general secretary of the BMS said.