New Delhi, April 4 (ANI): There have been numerous discussions around the role of government in business. Nevertheless the role of the public sector has been pivotal in economic growth.
"The role of public sector is essential for the growth of Indian economy and cannot be understated", said Minister of Heavy Industries and Public Enterprises Praful Patel at the CII Annual General Meeting and National Conference here on Thursday.
Since independence, the public sector enterprises (PSEs) have taken the initiative and risks associated with new ventures and areas of operations.
Patel further remarked; "PSEs have been growing at over 20 percent in turnover terms and over 14 percent in profit terms over the years, and have maintained a very high net asset base."
It must be acknowledged that PSEs have an overarching role in industrial development and have cutting edge technology. However they do face management constraints, even those conferred with special statuses. There are over 250 PSEs and almost all have the inherent capability to scale up but there are procedures that are constraining PSEs decision-making ability including the ones limiting their expansion into other markets.
Patel in his address also called for partnerships between the public and the private sector through various modes including JVs and SPVs. This according to him will be essential to leverage business synergies and achieve more meaningful results.
Planning Commission Member Arun Maira said there is no doubt on the role that PSEs have in the growth of the Indian economy. Commenting on the wide range of services and products historically offered by PSEs, Mr Maira stressed on the need to define the scope of the role that PSEs need to play at this crucial point. This is particularly so considering the unique ability to deliver services regardless of the consumer's ability to pay.
He also shared the recommendations of the Administrative Reforms Commission's report and the SK Roongta Committee Report on the subject of public sector autonomy.
Chairman and Managing Director of the National Thermal Plant Corporation (NTPC) Arup Roy Choudhury said some PSEs have grown since liberalization, even in areas where the private sector has forayed.
There are 44 listed companies which account for 20 to 25 percent of the market capitalization. PSEs also have the ability to cater to India's needs at competitive prices.
There have been instances of high growth even at time of slow down such as during 2008. All PSEs contributed Rs 1,60,000 which has also instilled investor confidence. NTPC raised $2.2 billion of which 47 percent was subscribed by investors abroad. It has also been acknowledged as having exemplary HR and corporate governance practices.
Choudhary also mentioned that decision making and ownership is an issue which needs to be addressed.
R S Butola, Chairman and Managing Director, Indian Oil Corporation Ltd said that there is widespread acknowledgement that there need for a strong public sector. While reiterating the concern with autonomy need for PSEs, he referred to the example of the Singapore investment firm TAMAESK and Singapore Airlines.
He also asserted that the role of state government and state enterprises as important in bringing the equilibrium in the market for growth of PSEs. He mentioned about the challenges in pricing which leads to difficulty in deciding on subsidy contribution.
He also said that the new procurement policy being prescribed by the government needs to be more transparent and more policy should not lead to more ambiguity.
According to him sourcing of crude oil is going to be a challenge and it needs to be addressed collectively, because the countries that have crude reserves are setting up their own refineries. Domestically, with the growing purchasing power, the energy demand has increased, so much so that the net import bill was USD 100 billion in 2011-12.
Therefore while on one hand quick decision making will enable PSEs to make acquisitions internationally, indigenous technology will help in exploration of domestic sources of energy.
B.P. Rao, Chairman, Bharat Heavy Electricals Limited (BHEL) stated that PSEs are venturing into areas that are considered risky.
He shared that BHEL alone is investing 2.5 percent of its sales in research and development for innovation and technology upgradation.
He also remarked that PSEs have the ability and have created talent pool that the private sector has also benefited from.
However he advocated reforms to facilitate smooth entry of PSEs into foreign markets.
Concluding the session, Tarun Das, former chief mentor, Confederation of Indian Industry (CII), endorsed the idea of partnership between the public and private sectors and the need to address challenges faced by PSEs.
He urged the industry leaders to drive the need for reforms in public sector management. (ANI)
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