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1458 hrs

MR. CHAIRMAN (DR. LAXMINARAYAN PANDEY): Now I request Shri Kharbela Swain to speak.

SHRI KHARABELA SWAIN (BALASORE): Sir, the Private Member's Resolution on which we are going to discuss today reads as under:

"This House urges upon the government to take concrete and effective steps to rehabilitate the sick Public Sector Undertakings under the control of the Central Government and formulate a comprehensive policy to improve the functioning of the Public Sector Undertakings"

Sir, while I oppose this Resolution moved by the hon. Member, Dr. Asim Bala, my basic question to this Resolution is, why should the Central Government go for the comprehensive policy to improve the functioning of the public sector undertakings.

Dr. Asim Bala, while moving this Resolution, has said that all the public sector undertakings should be improved. What is its meaning?

15.00 hrs.

The meaning is, Government should go on providing money to all the loss-making public sector enterprises. Sir, I will just now give you two or three figures. In 1996-97, the number of operating enterprises was 236. The total capital employed in all these public sector undertakings was Rs.2,020,21 crore. The net profit of all these 236 enterprises is Rs.10,257 crore. The profit-making enterprises come to 129 in number. The profit amount comes to Rs.16,120 crore. The loss-making enterprises come to 104 in number. The less amount comes to Rs.5,862 crore. I am just asking a question. Of the investment to the tune of Rs.2,020,21 crore, we are just making a profit of only Rs.10,257 crore. The percentage of net profit is coming to 5.1%. It is a question of the business. Will any businessman invest his money for a meagre profit of 5.1 per cent per year? Out of the 236 public sector enterprises, now 129 enterprises are making profits and 104 enterprises are making losses. Almost about 50 per cent of the enterprises is loss-making enterprises. I do not know if anywhere in the world, any Government is incurring a loss of about 40 to 50 per cent of the enterprises in which it has invested. I am really very surprised when even some of our hon. Members say that Government should go on providing money.

Sir, I am asking a question. What is the job of a Government? Is the Government an administrator? Or, is the Government a business man? What is this Government? Yes, I agree there are certain areas where the Government, the public sector will have to go and invest. When initially India became a free country, it got its freedom in 1947. Then there were so many fields like steel where heavy investment was required and where the private sector was unwilling to come. So, the Government came forward with the money. I do not say that the public sector undertakings should be abolished at one go. If not today, tomorrow the Government will have to invest some money in public sector undertakings. There are certain public sector undertakings. Let us take the example of oceanology. There are sectors like oceanology where heavy investment is required, and, there is a long gestation period for making profits. So, in those cases, the Government will have to invest the money. So, not only now but also in future the Government will have to go for space technology and oceanology where the Government investment is required. But why should the Government be a hotelier? Why should the Government go for making bread? There are even so many States which have invested money in poultry. Is it the job of the Government to go for making bread? Is it the job of the Government to build hotels? It is not a surprising matter that Government is making heavy losses basically in these sectors. I just mean to say that because of this type of huge losses that the Government had incurred, the Government went in for a Disinvestment Commission.

The Disinvestment Commission found certain reasons which were counted as the problems of the public sector enterprises. There are a number of reasons, that is, (i) low productivity, (ii) poor track management skills, (iii) over-manning, (iv) lack of technological upgradation, (v) inadequate attention to research and development; and (vi) low priority to human resource development. Basically, these six aspects form the problems of the public sector enterprises. The Disinvestment Commission recommended that up to 20 per cent of the Government equity in selected public sector enterprises would be offered to mutual funds and financial investment institutions. The Commission also identified some core and non-core sector companies where Disinvestment Commission could go up to 49 per cent in core sector and up to 74 per cent in non-core sector.

Now, I will just mention three or four other reasons as to why the public sector enterprises did incur loss. One of the reasons is less mobilisation of internal and extra budgetary support. The mobilisation of internal and extra budgetary support was well below the level projected in the Fifth Plan. This led to slow down in disinvestment and growth plan of the public sector enterprises. It led to a very serious consequence. There was no upgradation of the technology, modernisation of the plants and there was no plan of expansion. Ultimately, the diversification of the public sector enterprises was affected.

There was another reason also. That is the fall of budgetary support. As we all know, the fiscal deficit in the Union Government is going up for the last so many years and every year it is going up. Sometimes, it has gone up to seven per cent. There are even so many States where the fiscal deficit is up to eleven per cent of the GDP. Because of the widening of the fiscal deficit, the budgetary support which was 32 per cent in 1990 came down to 13 per cent in 1995. So, that was another reason. There was no money available for further investments in areas like technological upgradation and research and development. There was no money for expansion and this led to further loss in loss making enterprises.

There is another basic reason which I will just bring to your kind notice and that is about the increase in competition. Initially, when the public sector enterprises were set up by the Government, virtually there was no competition. Later on, the private sector people came forward with heavy investment in those sectors, which were not exclusive for the Government. Let us take the example of steel. The Tata Company came. The Tata steel plant and the Rourkela steel plant are almost contiguous and hardly there is a gap of about 150 kms between Tata Nagar and Rourkela. So, the Tata company invested heavily and it competed with the Rourkela steel plant and with other steel plants. It is very natural that this resulted in increased competition. It went not in favour of the public sector enterprises.

It went in favour of the private sector enterprises because these sectors were not exclusive for the Government. It was not a monopolistic sector like the Airlines or the Railways that Government could increase the money at any time or they had the power to fix the rate of their product as per their own sweet will.

The losses in the loss-making public sector enterprises account for about 60 per cent of the total direct budgetary support and, year after year, this is going to increase. There is intense competition due to deregularisation and globalisation and also because multinational companies and companies in other countries, which entered our market, produce the same thing. They also want to send their materials or products to India. This has led to intense competition. Ultimately, this has affected even the profitability of the profit-making concerns. In other words, the competition not only affected the loss-making enterprises but even the profit-making enterprises. The enterprises which were considered to be profit-making, all of a sudden, were braking even. They did not earn any profits and they were braking even.

Therefore, there is a need for the disinvestment. I do not agree with the Resolution that the Government should go on just providing the money to all sorts of loss-making enterprises. After all, it is the Government's money and why should the Government go in for this?

Now, I will mention two points. The disinvestment is required to provide financial discipline in not only the loss-making enterprises but even in the profit-making public sector enterprises. If we go through the process of disinvestment, this will improve the performance of the public sector enterprises because they will bring in a sense of financial discipline. They will no more think that they are a monopolistic sector and the Government will go on providing the money till eternity. Secondly, the disinvestment makes the much scarce capital available for investing it or putting it to alternative use in other public sector enterprises of greater importance.

Lastly, this year, with a target of Rs. 5,000 crore from the disinvestment, the Government is expecting Rs. 8,000 crore. The hon. Finance Minister told the other day that the Government is going to earn Rs. 8,000 crore. Our condition is so bad that even if we are going to sell the equities, nobody is coming forward to buy them. This is one of the reasons why the Government should not wait for the Sensex in the Stock Exchanges to go up. It should not wait for that and instead it should sell the equities now itself and utilise the money in other public sector where the private sector are not willing to come forward.

With these words, I thank you very much.

SHRI BASU DEB ACHARIA (BANKURA): Mr. Chairman, Sir, I thank Dr. Asim Bala for bringing this important Resolution on revival of sick public sector undertakings.

We have been discussing this issue in the House for the last several years. We have been facing this problem since 1991 when the policy of economic liberalisation was adopted by the Government of India. After Independence, we adopted an Industrial Policy Resolution in 1948 and then again in 1956. The attempt of the Government was to change the industrial policy which we adopted in 1956. We did not agree to all the points of the industrial policy of 1956. But we agreed to one important aspect of that policy, that is, the policy of self-reliance. The policy of self-reliance has been given a go-by now.

The aim of our struggle for independence was not just to achieve freedom. Our freedom fighters wanted that along with freedom there should be less and less infiltration of foreign capital and that we should achieve self-reliance. That was why, the concept of public sector as a policy was adopted after we achieved our Independence. It was not because we wanted to go towards socialism that it was done. It was because we wanted to achieve self-reliance; it was because we wanted to strengthen our country; it was because we wanted that we should have our own control in certain important sectors like the core sector that it was done. That was why the core sector was reserved for the public sector.

We can divide our public sector into two categories. One category is of those industries which have been in the public sector since inception. When they were set up, they were set up in the public sector. In the other category, there are a large number of industries which originally belonged to private sector. When these industries became sick, the Government of India took over them and subsequently nationalised them. What happened after nationalisation of some of these industries? No modernisation took place. When we adopted the policy of liberalisation, when we opened our doors and started inviting multinational companies in, and when we started saying that we should face competition, how could we face competition? With which company could we compete?

I can give you a few examples like that of IISCO, the Indian Iron and Steel Company.

Both these steel plants -- Tata Steel Plant and the IISCO in Burnpur -were set up almost simultaneously, in one year. IISCO was taken over by the Government of India in seventies. They nationalised it in 1978 by an Act of Parliament. But after nationalisation, not even a single paisa was invested over there for replacement of the age-old machinery and plants. Not even a single paisa was spent over modernisation of this plant. We have been clamouring for the last 15 to 20 years for the modernisation of this industry.

Sir, without modernisation and with the age-old machinery how can an industry compete with the modern and uptodate technology, with the multinationals? The glaring example is the Hindustan Cables about which hon. Shri Sikandar-ji knows well. It had the monopoly shares. Upto 1993, it was earning profit. But since 1994 it has become sick. It has four units with two major units, one at Rupnarayan Pur and the other at Hyderabad. It has about 5,000 to 6,000 workers employed there. Now, the multinationals are allowed to compete with the Hindustan Cables. They used to enjoy monopoly. But that monopoly is not there now.

About the plant at Rupnarayanpur which is the original plant, the mother plant, the Government of India took five years to decide for the setting up of a new plant, Jellyfield Cables.

I can give another example of Scooters India. The hon. Minister also knows about it well. Sir, a decision was taken by the Government of India to close that unit down. We, on the floor of the House, had raised that issue. Then the Government of India in 1985 or 1986, changed its decision. What was the problem with the Scooters India? Bajaj was allowed to have collaboration with a foreign company. Bajaj was allowed to do modernisation, to have investment for uptodate technology. But the Scooters India was not allowed to do all this. This way, how can the Scooters India compete with modern scooter industry?

After the Government changed its decision and decided not to close it down, it could be revived. Now, it is earning profit. So, if the Government tries to revive a sick industry, it is not a fact that it cannot be revived. It can be revived.

Sir, we are surprised to see and we did not expect that the eight public sector units, out of which the six are located in the State of West Bengal, will be closed down. Suddenly, the Government took a decision to close them down. Only one month back, we had a meeting of the Consultative Committee where we were informed that out of those eight units, at least, three were still under the BIFR.

BIFR has not given its final product. MAMC is a very important and vital engineering industry located in the State of West Bengal. Obviously, both HEC and MAMC were together. They were separated. Both used to manufacture the same product mix. They manufacture underground machinery. If HEC can be revived, if Government of India can spend Rs.131 crore to revive HEC, why cannot MAMC be revived which has the same product mix? Both are engineering companies.

That Coal India Ltd.which is also a public sector company, used to import four years back spare parts to the extent of Rs.500 crore. We suggested to them to give order to MAMC and they will manufacture and diversify so that the company could be revived. The revival plan was prepared. Why has BIFR decided to wind it up? It is because Government of India is the promoter and is the owner of the company. If the owner of the company shall refuse to be the promoter of that company, if the owner of the company refuses to undertake the responsibility to implement and execute the revival package prepared and approved by BIFR, what could BIFR do? If Government of India refuses to become the promoter of the company and to take the responsibility, what BIFR could do? After three years of deliberations when Government of India refuse to take up the responsibility, BIFR decided that it should be wound up. Not that the company cannot be revived. We have abundant reserve of coal for 50 years and underground coal is far better than overground coa and surplus coal. China is now producing 1,000 million tonnes of coal out of which the underground coal is at least 40 to 45 per cent. If China can produce coal from underground mining with Longwal mining machinery, then MAMC can manufacture Longwal mining machinery and this company can be revived. BHEL is the only company in our country to manufacture flint button. Defence requirement is there. What is the total requirement for the revival of this company?

It would cost only Rs.20 crore to Rs.25 crore. Do you not have that much money to spend on this? We are importing it from China and Russia. The Government of India has reduced the customs duty on flint button from 80 per cent to 20 per cent. Now, imported flint button is cheaper than our own product just as imported coal is cheaper than our indigenous coal.

You are destroying and ruining our indigenous industry.