Should loss-making PSUs be closed down?

Should loss-making PSUs be closed down?

It has been few months since FM Arun Jaitley indicated that the loss making state-run firms can either be closed or be considered for privatization. Finally, the government has confirmed that it will be closing six firms that come under the department of heavy industry. These firms are HMT Bearings, Tungbhadra Steel, Hindustan Photo Films, Hindustan Cable, HMT Chinar Watches and the iconic firm HMT Watches. Do you support the cabinet decision? Should loss-making PSUs be closed down?

Yes

• The loss-making PSUs have outlived their utility, and therefore it is better for the government to save whatever is possible.

• The government has to take the bold steps as it is the taxpayers who are ultimately paying for the losses. One cannot forget the money that government is pouring into Air India.

• There is no scope for revival as these firms are just sustaining on government support. Even if the steps of revival are taken, the poor management coverts it back into losses.

• Instead of pouring money into loss-making firms, government can think of investing the funds in some other constructive projects.

• As per the government data, there are as many as 61 CPSEs which employed about 1.53 lakh people, as on March 31, 2013. It is the government who is bearing the recurring expenditure of salaries of these employees.

• The government will offer VRS at the 2007 pay scale to more than 3,600 employees working in these PSUs along with additional benefits. This one time expenditure of 1,000 crore is better than the higher recurring expenditure.

• The loss-making PSUs are doing nothing but paving way for more crony capitalism. And, therefore, to encourage reforms and remove corruption, the units should be closed.

No

• Government has already invested so much in these companies, and now shutting them will be a complete loss. Instead of shutting down, government should seek change in management and then should implement revival plans.

• Government should look out for privatization of these firms or for some other plan where they can be partners with private firms.

• The closing of loss-making PSUs will largely impact the employees of these firms. It will increase the unemployment rate in the economy.

• Some of the firms like HMT Watches are the iconic firms of the country that should not be closed down.

• The firms can be revived with some plans but it is the corruption existing in the system that plays spoil sport.

Conclusion

The delayed decision will only increase the financial burden on the government. It has to keep the fiscal deficit under control and as of now there is no other better option than selling the PSUs that are ‘incapable of revival’. It is better to be late than never! It is the right time to take bold decision to improve the financial status of economy. However, government should not forget the employee’s problems in the process. The corrective measures taken today will create a transparent and fair business environment and will put an end to crony capitalism.