Union Finance Minister Sh. Pranab Mukherjee said that Central Government is committed to give our Public Sector Enterprises (PSEs/PSUs) the necessary flexibility and autonomy to operate effectively in a competitive environment. The Financre Minister said that the government has already delegated more powers to the Boards of Navratna and Miniratna companies in order to facilitate further improvement in their performance. He said that the government has also implemented revised salaries for executives of Public Sector Enterprises and introduced innovative measures such as performance related pay. These incentives for the employees have been linked to individual, group as well as company performance, the Finance Minister added.
The Finance Minister was addressing an august gathering on the occasion of presentation of the India Pride Awards 2010 instituted by the Dainik Bhaskar Group in Delhi yesterday.
Mr Mukherjee said that the government is also encouraging the listing of Public Sector Enterprises on the stock markets as this would unlock the true value of a company, improves its corporate governance standards and also help it in raising resources for funding future expansion plans. He said that as far as sick and loss making organizations are concerned, the government has made efforts to restructure and revive them, wherever this is possible. The Finance Minister further said that the government will continue to take steps to strengthen the public sector to enable it to play the role expected of it in a modern, fast growing economy.
The text of the speech given by the Finance Minister on the occasion is given below:
Speech of the Hon’ble Finance Minister on the occasion of presentation of the India Pride Awards instituted bythe Dainik Bhaskar Group on
13th September 2010
Ladies and Gentlemen,
1) It gives me immense pleasure to be with you today to present the India Pride Awards. Let me begin by complimentingthe Dainik Bhaskar Group for having instituted this award last year as a tribute to the contributions made by the PSUs for building our country. I congratulate the award winning organizations and their Chief Executives. It is a day to celebrate the achievements of the Public Sector Undertakings in general for playing the vital roles in shaping our economy and nation building for the past many decades. It is also a day to reflect on the progress made in achieving the economic and social objectives laid down over the years for the PSUs and on the strengths and weaknesses of these PSUs especially in the light of future expectations.
2) As you all know, the founding fathers of our republic used the public sector as an essential and vibrant element in the building-up of India’s economy. One of the basic objectives of starting the public sector in India was to build infrastructure for economic development and rapid economic growth. Pandit Jawaharlal Nehru envisaged to structure the economy on a mixed pattern in which both the public and private sectors participated and had their respective roles to play.
Pandit Nehru realized that modernization and technological development were vital to the growth of the nascent Indian economy and the government took upon itself the task of establishing strategic industries. Public sector enterprises became the pillars of the economy while the government concentrated on providing basic public goods and building much needed socio-economic infrastructure to our teeming rural and urban population. It is commendable that the public sector undertakings have come a long way despite the fact that these public sector undertakings had to start operations at a time when the economy had very low level of saving and investment, weak industrial base and near absence of infrastructure facilities.
3) Over the years there has been an appreciable growth in investment in the public sector. The expansion of the public sector was undertaken as an integral part of the industrial policy in 1956. The next major policy initiated by the government was the announcement of the Statement on Industrial Policy in July 1991. This coincided with the process to liberalize our economy and many experts were of the view that our Public Sector Enterprises would not be able to face local and increased global competition. Though some of them have not done so well in this period, on the whole, we have reasons to be confident about the ability of India’s public sector to operate in an increasingly open environment and thereby face the challenge of increased competition both domestically and globally. But fears and apprehensions about the very survival of public sector undertakings in the aftermath of the globalization and the private sector competition have proved to be unfounded.
4) These PSUs are operating now in diverse sectors of the economy and they are now poised to grow even faster in years to come. In the post reform period their turnover has increased about nine times and their cumulative net profit has grown more than 35 times. In 1951, total investment in five Central Public Sector Enterprises was merely Rs. 290 crore whereas now there are about 246 CPSEs with a total investment of about Rs. 5,28,951 crore. The net profit of profit making CPSEs was about Rs. 98,652 crore during 2008-09. These CPSEs are contributing significantly to the central exchequer by way of taxes, interest on government loans and dividends and employs about 15.35 lakhs people apart from causal workers and contract labourers.
Ladies and Gentlemen;
5) The Government is committed to giving our Public Sector Enterprises the flexibility and autonomy they require to operate effectively in a competitive environment. We have delegated more powers to the Boards of Navratna and Miniratna companies in order to facilitate further improvement in their performance. We have also implemented revised salaries for executives of Public Sector Enterprises and we have introduced innovative measures such as performance related pay. The incentives for the employees have been linked to individual, group as well as company performance. We expect all this to lead to sound practices for the development of human resources, which are of critical importance in today’s competitive environment.
6) The government is also encouraging the listing of Public Sector Enterprises on the stock markets as this would unlock the true value of a company, improves its corporate governance standards and also help it in raising resources for funding future expansion plans. As far as sick and loss making organizations are concerned, the government has made efforts to restructure and revive them, wherever this is possible. We will continue to take steps to strengthen the public sector to enable it to play the role expected of it in a modern, fast growing economy.
7) It is worth noticing that PSUs operating in industries such as coal, petroleum products, power generation, telecommunication services and fertilizers with a major market share or complete monopoly as in nuclear power generation a decade ago saw their shares curtailed during the past few years. I believe in the long run raising productivity and increasing profitability will be the key for survival of all PSUs from the tough private sector competition. PSUs need to tap on new growth areas and remain competitive.
8) I appreciate the competitive spirit and efforts to look beyond our borders by some of the PSUs. I am sure their global forays would fetch them long term dividends as the race to acquire depleting raw material sources is increasing day by day. PSUs need to optimize use of their resources and capabilities to produce higher-value products and services that are in demand. They also need to bring these products and services to new markets. All PSUs need to continue to maintain their core strengths while remaining flexible and nimble to withstand any downturns and capitalize on new opportunities.
Ladies and Gentlemen;
9) The corporate social responsibility (CSR) is an important tool to bring the key deliverables at the doorsteps of the citizens. In a diverse country like India in spite of best efforts Governments have not been able to reach to certain areas. This gap has been filled up through CSR. The PSUs of this country are playing a leading role in our developmental process through their CSR. The recognition to the PSUs will further motivate them to enhance their efforts for developmental process through CSR.
10) I am glad that the India Pride Awards felicitate the achievers from diverse categories covering almost all crucial areas of our economic activities and have also instituted special categories of awards to promote innovations in the fields like,corporate social responsibility, environment protection and conservation, Indian Image enhancement and creating global brand. This year it has been extended to include the State level PSUs also. As we all know that apart from Central PSUs, at State level, State Public Sector Undertakings are also playing equally important role in building crucial social-economic infrastructure. State PSUs are also a key source of employment in many States. To award and encourage progressive and successful State level public sector enterprises is the most appropriate step taken by the Dainik Bhasker Group.
Let me conclude by once again congratulating the award winning organizations and individuals. I appeal to all of you to contribute towards strengthening of our public sector. Indeed, by doing so you will be strengthening our country. I wish all of you the very best.