Public Sector Undertakings (PSUs) have long been a cornerstone of India’s industrial and economic development. Established in the years following independence, these enterprises were intended to build the nation’s industrial base and promote inclusive growth. However, many PSUs have struggled with financial losses, inefficiencies, and managerial challenges over time. When a PSU’s losses in a financial year equal or exceed 50% of its average net worth over the preceding four years—or when it meets the criteria under the Sick Industrial Companies (Special Provisions) Act—it is labeled “sick.” This article explores the phenomenon of sickness among Indian PSUs, presents a detailed list of 64 sick Central Public Sector Enterprises (CPSEs), and examines the reasons behind their distress and the policy measures to revive them.
Understanding “Sick” PSUs in India
Definition and Criteria
A Public Sector Undertaking is considered “sick” when its cumulative losses in any financial year reach at least 50% of its average net worth over the four immediately preceding years. This definition, established by a Government of India resolution (6.12.2004), is used to identify enterprises that are in such a precarious financial state that they require restructuring, revitalization, or, in some cases, closure. Such measures are part of a broader government effort to streamline the public sector and reduce fiscal drag on the economy.
Historical Role of PSUs
After India gained independence in 1947, the government embarked on an ambitious program of industrialization. PSUs were created in sectors like heavy engineering, chemicals, and transportation to drive this growth. Over the decades, however, many of these enterprises faced a host of challenges, including outdated technology, overstaffing, bureaucratic inefficiencies, and increasing competition from the private sector. As a result, a significant number of these PSUs began to post consistent losses, leading to their classification as “sick.”
The List of 64 Sick CPSEs
Based on data available as of 31 March 2012 (as outlined in a Press Information Bureau (PIB) release), the following 64 Central Public Sector Enterprises (CPSEs) were identified as sick. These enterprises span diverse sectors—from manufacturing to services—and together highlight the challenges facing India’s public sector.
- HMT Bearings Ltd.
- Bharat Heavy Plate & Vessels Ltd.
- Hindustan Fluorocarbons Ltd.
- Brahmaputra Valley Fertilizer Corpn. Ltd.
- STCL Ltd.
- Assam Ashok Hotel Corpn. Ltd.
- Andaman & Nicobar Isl. Forest & Plant. Dev. Corp. Ltd.
- Bihar Drugs & Organic Chemicals Ltd.
- Bharat Wagon & Engineering Co. Ltd.
- National Textiles Corporation Ltd.
- Hindustan Shipyard Ltd.
- National Projects Construction Corporation Ltd.
- Hindustan Vegetable Oils Corporation Ltd.
- Hotel Corporation of India Ltd.
- Airline Allied Services Ltd.
- Fertilizer Corporation of India Ltd.
- Hindustan Fertilizer Corporation Ltd.
- Indian Drugs & Pharmaceuticals Ltd.
- HMT Chinar Watches Ltd.
- J&K Mineral Development Corporation Ltd.
- Bharat Coking Coal Ltd.
- Ranchi Ashok Bihar Hotel Corpn. Ltd.
- Tungabhadra Steel Products Ltd.
- HMT Machine Tools Ltd.
- ITI Ltd.
- HMT Watches Ltd.
- HMT Ltd.
- Fertilizers & Chemicals Travancore Ltd.
- NEPA Ltd.
- Madhya Pradesh Ashok Hotel Corpn. Ltd.
- Richardson & Cruddas (1972) Ltd.
- Hindustan Organic Chemicals Ltd.
- Hindustan Antibiotics Ltd.
- Air India Charters Ltd.
- Air India Air Transport Services Ltd.
- Air India Ltd.
- National Film Development Corporation Ltd.
- North Eastern Handicrafts & Handloom Dev. Corpn. Ltd.
- Nagaland Pulp & Paper Co. Ltd.
- Orissa Drugs & Chemicals Ltd.
- Utkal Ashok Hotel Corpn. Ltd.
- Hindustan Salts Ltd.
- Instrumentation Ltd.
- Sambhar Salts Ltd.
- Hindustan Photo Films Manufacturing Corpn. Ltd.
- Madras Fertilizers Ltd.
- IDPL (Tamilnadu) Ltd.
- TriveniStructurals Ltd.
- Scooters India Ltd.
- British India Corporation Ltd.
- Elgin Mills Co. Ltd.
- Bharat Immunological & Biologicals Corp. Ltd.
- Tyre Corporation of India Ltd.
- Hindustan Cables Ltd.
- Birds, Jute & Exports Ltd.
- National Jute Manufactures Corporation Ltd.
- Bengal Chemicals & Pharmaceuticals Ltd.
- Eastern Coalfields Ltd.
- Hindustan Steelworks Construction Ltd.
- Central Inland Water Transport Corporation Ltd.
- Hooghly Dock & Port Engineers Ltd.
- BieccoLawrie Ltd.
- Burn Standard Company Ltd.
- Fresh and Healthy Enterprises
Source: Press Information Bureau, 2013
Factors Behind PSU Sickness
1. Internal Management and Operational Issues
Many of these enterprises have suffered from outdated technology, poor management practices, overstaffing, and inefficient production methods. In some cases, bureaucratic red tape has stifled innovation and made it difficult for these organizations to compete with private players.
2. Market Dynamics and Competition
As India’s economy liberalized from the 1990s onward, increased competition from both domestic and global private companies further exposed the inefficiencies of many PSUs. This shift in market dynamics has often led to revenue declines and mounting losses for these enterprises.
3. Policy and Structural Challenges
The financial performance of PSUs is also affected by regulatory and policy frameworks that sometimes limit their operational autonomy. In addition, delayed modernization, inadequate investment in research and development, and political interference have all contributed to the protracted financial distress of many CPSEs.
Government Initiatives and Revival Measures
Revival and Restructuring Efforts
Recognizing the adverse impact that sick PSUs can have on the economy, the Government of India has introduced various revival and restructuring measures. These include:
- Business Restructuring: Encouraging joint ventures, strategic partnerships, and mergers to revitalize operations.
- Modernization Programs: Upgrading technology and management systems to enhance efficiency.
- Financial Support: Providing cash and non-cash assistance, such as equity injections, loan guarantees, and interest waivers, to help these enterprises stabilize their finances.
- Policy Reforms: Implementing guidelines and frameworks (for example, the New Public Sector Enterprise Policy) aimed at streamlining operations and improving corporate governance.
Role of Institutional Bodies
Institutions such as the Board for Industrial and Financial Reconstruction (BIFR) were established to monitor and revive sick industrial companies. While BIFR’s track record has been mixed, its efforts laid the groundwork for subsequent policies designed to assess and address the financial health of PSUs.
Impact and Future Outlook
Economic and Social Impact
The high number of sick PSUs not only represents a significant fiscal burden on the government but also affects employment and overall economic efficiency. Many of these enterprises employ thousands of workers, and their prolonged distress can lead to large-scale layoffs and regional economic downturns.
Challenges Ahead
Reviving sick PSUs remains a complex challenge. Factors such as market volatility, global economic conditions, and entrenched inefficiencies mean that each enterprise often requires a tailored approach. The government continues to evaluate strategies, including further privatization, mergers, and targeted subsidies to turn around these companies.
Path Forward
For the long-term health of the public sector, it is essential to balance the objectives of public welfare with the need for commercial viability. Strengthening governance, reducing political interference, and enhancing operational autonomy are key steps that could help transform these sick units into profitable and sustainable enterprises.
Conclusion
The list of 64 sick CPSEs in India serves as a critical indicator of the challenges that many public sector enterprises face. While these PSUs were once the engines of industrialization and economic growth, changing market conditions, internal inefficiencies, and policy constraints have left many struggling financially. The government’s ongoing efforts to revive and restructure these units are crucial not only for restoring fiscal health but also for ensuring that these enterprises continue to contribute to India’s economic and social development. Moving forward, a combination of modernization, strategic partnerships, and better governance will be essential in turning the tide for India’s sick PSUs.
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