Page 648 - ES 2020-21_Volume-1-2 [28-01-21]

Industry and Infrastructure 275

8.15 The Government has since then taken several measures to reduce its presence in commercial
activities both through the stock market route and through strategic sale. This policy to withdraw
has been a subject of discussion in several economic surveys (more specifically 2000-01, 2001-
02, 2002-03) reflecting the deliberations in the Government on the matter.

8.16 Under the aegis of the Atmanirbhar Bharat Mission, the government has proposed to
rationalise the participation of the CPSEs in commercial activities. It has been argued that the

existence of the CPSEs should only be in the ‘strategic sectors’. Accordingly, the number of PSEs
in the strategic sector will ideally be limited to four– others would either be merged or privatized
or brought under holding companies. Further, the CPSEs in the non-strategic sectors would be
privatized as per guidelines issued. This initiative is expected to bring healthy competition in
sectors and will also assist the Government to focus extensively on ‘strategic sectors.’

8.17 While disinvestment and rationalization of some the CPSEs is being planned, there is
also a need to strengthen the ones that would be retained in their respective sectors so as to
fully meet with the expectations of the government. An important step in this direction would
be to completely revamp the Boards of the CPSEs to reorganize their structure, enhance their
operational autonomy coupled with strong corporate governance norms including listing on stock
exchanges for greater transparency. Department of Public Enterprises has separately initiated
revamping of Performance Monitoring system of the CPSEs to make it more objective and
forward-looking based on sectoral indices/benchmarks. Also, certain reforms in the direction
of timely closure of sick and loss making the CPSEs and disposal of their assets have been
initiated.

8.18 In view of COVID-19 outbreak, the Ministry of Corporate Affairs has extended the last
date for conducting AGM in case of all the companies including CPSEs to 31 December 2020.
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Hence, there has been a delay in conducting annual audit and in preparing financial statements of
the CPSEs. As of January 15, 2021, based on provisional information with Department of Public
Enterprises, there are 366 CPSEs as of March 2020. Of these, 256 are in operation, but only
171 CPSEs booked profit during FY20. The total profit of profit-making CPSEs was ` 1.38 lakh
crores in FY20, whereas the consolidated loss of loss-making enterprises was ` 44,816 crores.
The overall net profit of the CPSEs declined by 34.6 per cent to reach ` 93,295 crore in FY20 from
` 1.43 lakh crore in FY19. CPSEs are operating in 4 sectors – Agriculture, Mining & Exploration,
Manufacturing, and Services.

Corporate Sector Performance

8.19 As per the RBI report on corporate performance, demand conditions in the manufacturing
sector moved to the path of recovery with a softer contraction of 4.3 per cent (YoY) in nominal
sales for Q2:2020-21 after a contraction of 41.1 per cent in the previous quarter due to pandemic
led country-wide lockdown. The recovery was led by iron and steel, food products, cement,
automobile, and pharmaceutical companies. The net profit for the manufacturing sector
contracted by 7.8 per cent in Q2:2020-21 (Figure 12a and 12b).