54. Government’s policy towards the public sector is clear and unambiguous. Its main elements are :-

¨ restructure and revive potentialy viable PSUs;

¨ Close down PSUs which cannot be revived;

¨ Bring down Government equity in all non-strategic PSUs to 26% or lower, if necessary; and

¨ Fully protect the interests of workers.

55. In line with this policy during the last two years financial restructuring of 20 PSUs has been approved by Government. As a result, many PSUs have been able to restructure their operations, improve productivity and achieve a turn around in performance. Hon’ble members are aware that Government have recently approved a comprehensive package for restructuring of SAIL, one of our Navaratna PSUs.

56. There are many PSUs which are sick and not capable of being revived. The only remaining option is to close down these undertakings after providing an acceptable safety net for the employees and workers. Resources under the National Renewal Fund have not been sufficient to meet the cost of Voluntary Separation Scheme (VSS) for such PSUs. At the same time, these PSUs have assets, which if unbundled and realised, can be used for funding VSS. Government will put in place mechanisms to raise resources from the market against the security of these assets and use these funds to provide an adequate safety-net to workers and employees.

57. Government have recently established a new Department for Disinvestment to establish a systematic policy approach to disinvestment and privatisation and to give a fresh impetus to this programme, which will emphasize increasingly on strategic sales of identified PSUs. Government equity in all non-strategic PSUs will be reduced to 26% or less and the interests of the workers will be fully protected. The entire receipt from disinvestment and privatisation will be used for meeting expenditure in social sectors, restructuring of PSUs and retiring public debt.