A staggering number of PSUs, more than one fourth of the total 240, have the dubious distinction of having outstanding dues totaling about Rs.2100 crore. But what is more ironical is that the dues comprise statutory liabilities, salaries and wages and have a direct impact on the workers. No wonder, the government as the custodian of the PSUs has to act though the pace of the action is painstakingly slow. Recognizing the acute problem afflicting over 70 such PSEs, Prime Minister Mr. Atal Bihari Vajpayee constituted a Group of Minister more than three years ago (February 9, 2000) and yet it is to come out with the first set of recommendations.

The problem of dues is most acute in the PSUs under the Ministry of Textiles, followed by Heavy Industry, Coal and Steel. As per a draft report prepared by Department of Public Enterprises and being considered by the GoM, “out of the 240 PSEs, there are 73 such enterprises which have outstanding dues. Of this, 21 enterprises have outstanding statutory dues only on salary and wages. As many as 42 enterprises have outstanding dues both on statutory dues and salaries and wages.” Identifying the total dues in the range of Rs.2068.84 crore comprising of Rs.1600.87 crore as statutory and Rs.467.97 crore of salaries and wages, the draft report pointed out that out of 73 enterprises as many as 43 were sick. Of the total outstanding, textile PSUs alone account for 27 per cent. Corporations under Heavy Industry Ministry account for 20.3 per cent, while those under the Ministries of Coal and Steel contribute 20.1 per cent and 16.5 per cent respectively.

More than the quantum of the dues, the issues of workers make the problem grim. It is in this backdrop, GoM, headed by Deputy Chairman of the Planning Commission, was assigned the task of considering and making recommendations on problems relating to payment of wages, salaries and statutory dues of employees in CPSUs particularly the sick ones, VRS policy, periodicity of pay/wage revisions in CPSUs and safeguarding of workers interest in sick PSUs. During about half a dozen meetings that the GoM had till now, the latest being on January 23, some broad contours of what could be a possible prescription are beginning to emerge.

As an immediate remedial measure, the GoM is understood to be considering recommending that a budgetary provision be made of around Rs.750 crore to clean the outstanding dues of 28 sick PSUs. At the same time, it is also considering recommending a time-bound action programme for PSUs, which could liquidate dues from internal resources or sale of assets. But what is more important is that GoM is considering major policy issues of handling the problem and looking for legal remedies to tackle the problem particularly for the PSUs that are considered beyond redemption but the winding up process makes the closure a difficult and cumbersome one. It is in this backdrop, the GoM asked the Heavy Industry Ministry to look for remedies in consultation with Law Ministry. 

“To the extent that there are certain legal differences that were referred to, the concerned ministry with the Law Ministry will look into it”. Mr. K.C Pant told reporters after the last meeting. He said that GoM would meet again in the next six weeks. As per the discussions held on January 23 in the GoM, which among others have Ministers of Law, Heavy Industry, Power, Textiles and Communication as members, the issue of having in place a legal provision was discussed to tackle PSUs referred to the Board for Industrial and Financial Reconstruction (BIFR). It is understood that option of pulling out such corporations from the purview of BIFR for expediting their liquidation is being considered and Heavy Industry Ministry has been asked to frame a proposal for consideration of GoM.

The need for such a measure was felt in the wake of delay in repeal of the Sick Industry Company Act (SICA) as also the mounting dues of the PSUs valued at about Rs.2, 100 crore as per June 2002 data. Besides, GoM is seeking detailed information from the Administrative Ministries on each of the PSUs that is facing the problem of statutory dues, with identification that which of the PSUs they would like to close down or where they would prefer to ask for revival. At the same time, GoM felt that funds earmarked from Budget for salaries should not be diverted for purpose of capital expenditure. GoM is also understood to have asked the Textile Ministry to rehabilitate NTC units by June 2003 as against its earlier target of October 2003.

On its part, the Heavy Industry Ministry said in its draft report that the payment of statutory dues, as per law, is the responsibility of the management and the government may extend financial support as a one time measure based on action plans of administrative ministries on closure/winding up or revival. Payment of such dues also should be tied to the maximum extent from the resources of PSUs and the budgetary support be given in case it was inevitable to meet the resource gap of the particular corporation. It also sought creation of a separate fund for discharging of the statutory liabilities immediately and the same could be raised by diverting dividend being paid by the profit making companies, since the public sector is not in the red on an aggregate basis. At the same time, the need has been felt for tighter norms to ensure greater accountability for ensuring that the liabilities are frozen at present level, although there is hardly any support for the view that plan funds be diverted for meeting these dues.

At a time when the government is pursuing the policy of disinvestment aggressively, there have been many cases where a financial restructuring has been necessitated before commencing the sale of equity to a strategic partner, like what was witnessed in the case of Paradeep Phosphate. With increasing pressures on the government offers, the policy planners could hardly afford any load of a further mounting of statutory dues and therefore the GoM is now showing some sense of urgency to tackle the issue. No matter, what the financial or other compulsions are the government will do well to expeditiously find the solution for the issue in the larger interest of workers and in pursuance of the policy of disinvestment, particularly of the sick and unviable units where in their present health condition there could hardly be any takers. As such Disinvestment Ministry had recently returned some of the PSUs back to the Heavy Industry Ministry saying they were unable to find suitors for either joint ventures or outright sales.