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Government Puts MTNL, Air India and Other PSUs On the Sick List, Might Be Shut Down

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Government Puts MTNL, Air India and Other PSUs On the Sick List, Might Be Shut Down

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The present Indian government had the mammoth task of bringing the Indian economy back on track. There was a need for radical reforms to pay off the country’s debts and boost the development process. There was though no mention of the radical reforms in the budget, but the government seems to be in a cost-cutting mode and has tabled a list of 65 sick public sector undertakings (PSU) in the Parliament whose future hangs in the balance.

The government has said that of the 65 heavy loss-making PSUs, it is shutting down five companies including the three HMT units. The Minister for Heavy Industry, Anant Geete informed the Lok Sabha during question hour that the employees of such PSU’s will be offered “very good” voluntary retirement schemes.

Air-India-Logo

Air India, founded by J R D Tata in 1930, has been gathering huge losses

MTNL and Air India were the most prominent addition to the list of sick PSU. MTNL or the Mahanagar Telephone Nigam Limited is the state-owned telecommunications service provider in the metro cities of Mumbai and New Delhi in India and in the island nation of Mauritius in Africa. It was founded in 1986 and had a monopoly over New Delhi and Mumbai till 1992. The company has been struggling lately due to immense competition from private operators.  MTNL has said that it has sent a revival proposal that is currently under the consideration of the department of telecommunication(DoT).

Air India, on the other hand, was founded by J R D Tata in 1930 as Tata Airlines. It has been India’s national carrier since 1948. The public owned airlines has been gathering huge losses and has slipped to the third spot behind Indigo and Jet Airlines.

Minister of State for Civil Aviation, Mahesh Sharma said that it was important to have a flag carrier for the country and so there are no plans for shutting down Air India. He said that the government is infusing the allocated funds in Air India as a part of its turnaround and financial restructuring plan, approved by the UPA government in 2012. Shutting down the national carrier would have been embarrassing for the country’s image.

These PSUs were declared sick as they incurred losses worth 50 percent or more of their average net worth during four previous years. Some of the reasons for their losses are obsolete plants and machinery, heavy interest burden, resource crunch, surplus manpower and shortage of working capital.

goverment

Indian Government PSUs sick as they incurred losses worth 50 percent or more of their average net worth during four previous years.

The board for reconstruction of public sector enterprises (BRPSE) has recommended revival packages for 48 CPSEs, which has been approved by the government. Some of the other companies in the list are Scooters India, Hindustan Shipyard, ITI and Hindustan Cables.

This is still a news in progress, and more details will be available soon. It seems like the government is seriously considering measures to trim down the fat so the resources of the nation can be used efficiently. But the government also needs to take care of the welfare of the employees who have given their lives to these companies.

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About The Author
Meenakshi Rawat
Meenakshi Rawat
iGyaan's newbie Meenakshi handles content at iGyaan. She is an ultimate foodie, loves travelling and likes to read.
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