About six months ago, the Manmohan Singh government set up the Board for Reconstruction of Public Sector Enterprises. It was commonly understood then that the task of BRPSE was to examine the various ailing public sector undertakings and recommend what should be done with them.
There were also serious doubts about the appropriateness of naming former secretary in the department of statistics and programme implementation, Prahlad Basu, as the chairman of the Board.
But these doubts were dispelled to some extent and hopes were raised when the government notified the constitution of the Board a few weeks later.
Three secretaries to the government of India, a former secretary to the department of public enterprises, a former chairman of a PSU and a professor from an Indian Institute of Management were among those appointed as members of the Board. And these secretaries were heading important departments in the Union government.
One was in charge of the department of expenditure in the finance ministry, while the other two were heading the departments of public enterprises and divestment. So, it was hoped that the Board would become an effective instrument for strengthening public sector enterprises.
What's more, the government notification on the formation of the Board widened its jurisdiction. In addition to making recommendations on beefing up PSUs by making them more autonomous and on restructuring the ailing ones, the Board was now expected to advise the government on divestment, closure or sale of chronically sick or loss-making companies that could not be revived.
In respect of unviable companies, the Board was expected to advise the government on how they could raise funds through methods including the sale of surplus assets of the enterprise for the payment of all legitimate dues and compensation to workers and other costs of closure.
Not surprisingly, BRPSE was seen as a body that would push through restructuring of sick PSUs through merger, divestment or by seeking strategic partners. It was understood that the United Progressive Alliance could not push through disinvestments of government equity in all PSUs because of political problems.
But the Board would be able to at least get rid of the sick PSUs through a process of consultations among ministries and other stakeholders.
In the past six months, BRPSE has been able to complete the examination of as many as 22 PSUs, many of them are sick. These include Coal India Limited, the National Textile Corporation and nine of its subsidiaries, Hindustan Salts, Bridge and Roof, Triveni Constructions, Triveni Structurals, Madras Fertilisers, FACT, Braithwaite, Nagaland Pulp and Paper, IRCON International, Engineering Projects India, National Building Construction Corporation, Hindustan Steelworks Construction, National Project Construction Corporation, Bharat Pumps and Compressors, Hindustan Machine Tools, Praga Tools, BBJ Construction Corporation and Cement Corporation of India.
Not much is known about the recommendations BRPSE made in each of these individual cases. For, only one of the recommendations has so far managed to travel to the Union Cabinet for its final clearance.
This pertains to Hindustan Salts Limited. The proposal included fresh infusion of capital into the company. No one knows why the recommendations of BRPSE in respect of 21 other PSUs have not yet been processed and sent for the Cabinet's consideration.
Nor is it clear if BRPSE is only recommending politically safe and non-controversial methods such as fresh infusion of capital and is avoiding making bolder suggestions such as mergers and disinvestments of government equity in sick PSUs.
Clearly, the government needs to take quick decisions on all the recommendations made by BRPSE on divestment, revival or restructuring of the PSUs and, more importantly, make them public. It is possible that delays are taking place because the administrative ministries may not always be comfortable with the proposals being mooted by the Board.
The way out of such problems is to set a deadline by which the administrative ministries must send their comments on the Board's recommendations. And if no comments are received from the administrative ministry within the deadline, the government should assume that there are no objections and move ahead on the Board's recommendations.
This is how the Vajpayee government functioned while dealing with divestment cases and there is no reason why the same precedent cannot be used.
There is one more problem. The UPA government had envisaged that the establishment cost of BRPSE would be met through an appropriate provision in the Budget for the department of public enterprises. So far, no such provision has been made in the Budget. Consequently, the Board functions from a room in Udyog Bhawan, provided by the department of public enterprises.
But it has none of the infrastructure support that any board with such jurisdiction should enjoy. The government cannot claim that it is serious about restructuring sick PSUs and fail to either provide infrastructure support to BRPSE or take quick decisions on its recommendations.