Wednesday, December 22 2004 12:19 Hrs (IST) - World Time -

New Delhi: The coming to power of the Congress-led United Progressive Alliance (UPA) at the Centre has brought about a major turnaround in the Government's policy on public sector undertakings (PSUs).

While the previous National Democratic Alliance (NDA) Government had favoured disinvestment of Government holding in PSUs, the present Government, heavily dependent on Left parties' support, has unleashed all its efforts to preserve their foothold in the industry and ensure that their investments are protected.

When Suzuki Motor Corporation of Japan announced Rs 1,000 crore additional investments in India without taking its joint venture with the Government, Maruti Udyog Ltd, into confidence the Government acted with a heavy hand.

A strong letter by the Government, which holds slightly more than 18 per cent in Maruti, brought the Suzuki top brass rushing to India. After negotiations, Suzuki agreed that Maruti would hold 70 per cent stake in its new car manufacturing venture and upto 49 per cent stake in the facility to produce diesel engines.

Change in Govt's PSU policy

The change in Government's PSU policy has been dictated to a large extent by the exigencies of staying in power with support of Left parties and a dominant view in Congress itself that the party lost in 1996 elections because of the policies of liberalisation followed by Narasimha Rao Government.

The National Common Minimum Programme, which the Congress signed with its supporting parties, called for a strong and effective public sector whose social objectives are met by its commercial functioning.

In its first exhaustive articulation of the direction in economic matters that the UPA will follow, Finance Minister P Chidambaram had announced in his Budget speech in July the formation of Board for Reconstruction of Public Sector Enterprises (BRPSE) and equity support to Government companies in aviation, railways and telecom.

But before the board could be formed, the Ministry of Heavy Industries and Public Enterprises started working on a multi-pronged approach to revive and strengthen loss-making and weak public sector companies.

Steps to clear of dues employees

Due to the Ministry's efforts the Government agreed to give Rs 517 crore support to the 24 sick companies under the heavy industry to clear salaries and other statutory dues of their 45,000 employees till July this year.

Officials in the Ministry say with the clearance of dues, employees of some of these companies, which were on the verge of closure, have started reporting for work and many are gradually resuming production.

The Government has also asked some other PSUs to approach the Finance Ministry for floating bonds guaranteed by it to raise money for paying the dues of their employees.

To support these companies, the Ministry pushed for and got an extension of purchase preference scheme which expired after the second extension on March 31, 2004, till March 2005.

The Ministry of Heavy Industries and Public Enterprises had, however, asked for extension of the scheme by five years. The decision on further extension of the scheme will be taken later.