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HEAVY INDUSTRIES AND PUBLIC ENTERPRISES
The UPA Government completes one year on May 21, 2005. During this period, the Government has taken several important initiatives. Some of these are being brought out in the series ‘Major Decisions and Initiatives’.
Industry is a major contributor to the fast growing Indian economy. Overall industrial production in the country has been showing a rising trend during the last one year. Industrial production grew by 6.9 per cent in 2003-04. The last financial year 2004-05, started on a positive note with annual growth of 8.9 per cent in the Index of Industrial Production (IIP). The deceleration in growth observed in May 2004, just before the UPA Government took over, was quickly reversed and IIP growth gained momentum till October. During October the IIP registered the highest growth (10.1 per cent) since November 1997. It marginally declined in November, but revived again in December 2004. The current year conforms to the normal historic pattern of industrial buoyancy following a good agricultural year. Industrial growth of 8.4 per cent during April-December 2004-05 is the highest after 1995-96.
Heavy Industry and Public Sector Enterprises play a pivotal role in almost all the sectors of the economy, including those of infrastructure, such as power, rail and road transport. They cater to the requirements of equipment for basic industries like steel, non-ferrous metals, fertilizers, refineries, petrochemicals, shipping, textiles and a host of industrial machineries including paper, cement, sugar, etc. They are also responsible for development of a wide range of intermediate engineering products like castings, forgings, diesel engines, industrial gears and gear boxes. One of the major industrial sectors in India is the automotive sector. Automotive industry has been showing a substantial growth during the last few years since the opening up of this sector in 1993. In the recent past, the focus has ostensibly been on capital goods and engineering industries including auto industry. The high growth in automobile production continued in the last one year. Automobile sector recorded a growth of 16.8 per cent during 2004-05, compared to 15.34 per cent during 2003-04.
As per the policy on Public Sector contained in the National Common Minimum Programme (NCMP) of the UPA Government, various steps have been initiated during the last one year in terms of restructuring and revival of sick Public Sector Enterprises as also to provide autonomy to the profit making Public Sector Enterprises. Public Enterprises Survey 2003-04 laid in Parliament on May 2, 2005 indicated a remarkable improvement in the overall performance of the 242 CPSEs.
With a view to implementing the mandate as per NCMP, Government has established a Board for Reconstruction of Public Sector Enterprises (BRPSE) on December 6, 2004. The Board addresses the entire gamut of issues pertaining to revival/restructuring of public sector undertakings. The Board is also supposed to advise Government on measures to strengthen the public sector undertakings in general and making them more autonomous and professional. The Board is also expected to monitor incipient sickness in Central Public Sector Enterprises (CPSEs) and suggest ways and means, and sources for funding the revival/restructuring packages.
The recommendations of the Board are advisory in nature. The administrative Ministries concerned with the relevant Public Sector Enterprises reflect the recommendations of the Board in their proposals which are submitted for consideration and approval of the Government.
All privatisation are being considered by the Board on a transparent and case-to-case basis. Privatisation revenues are to be used for designated social sector schemes.
The Government has recently taken a number of steps to improve the performance of Public Sector Enterprises. These include increased payment of ex-gratia amount under Voluntary Retirement Scheme (VRS) to employees in CPSEs following the Central Dearness Allowance (CDA) pattern of pay scales; providing delegation for mergers and acquisitions as also for re-establishment of joint ventures/subsidiaries; strengthening the system of Memorandum of Understanding (MoU) by incorporating additional parameters such as measurable Productivity, International Benchmarking, Human Resource Management, etc. MoU guidelines for the year 2005-06 have been modified. Common parameters have been set in the MoU guidelines for all PSEs other than Social , Financial , Trading and Consultancy PSEs.
Apart from the above, the Government is in the process of implementing a number of measures to strengthen the profit-making CPSEs which include providing greater financial autonomy, professionalisation of Boards, delegation of enhanced financial powers, adopting corporate governance practices, review of Nava Ratna and Mini Ratna Schemes and extension of Purchase Preference Policy.
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RK:LV
PIB SF-34 (15.5.2005)
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