Union government ponders to shut down some loss-making state firms
NEW DELHI: The Union Government is all set to shut
down some loss-making state-owned companies, risking a conflict with powerful
trade unions. According to sources, officials will meet on Tuesday to discuss
proposals on it.
After two decades of halting privatisations, the
central government still owns about 260 firms and thousands more at the state
level, involved in activities ranging from generating nuclear power to making
Some of them, including Oil and Natural Gas
Corporation and Steel Authority of India are successful, but there are dozens more
that have been bleeding cash for decades and kept afloat by budgetary support
On Tuesday, Cabinet Secretary Ajit Seth has called a
meeting of top officials to consider what to do with the 10 firms that make the
biggest losses. They had a combined net loss of 245 billion rupees ($4 billion)
The list includes Bharat Sanchar Nigam, Mahanagar
Telephone Nigam, Air India, Hindustan Photofilms and Hindustan Fertilisers
Corporation, according to a note prepared by the Department of Public
Officials at the department have drawn up proposals to
close some, including Hindustan Photofilms, a company set up in 1960 to make
film rolls and take on the likes of Kodak but declared a sick company in 1996. The
department had recommended its closure in 2003 on the grounds that it could not
compete with private players.
The company, based in the southern town of Ottacamund
in the Nilgiri Hills, went to court and won a stay order on any further
proceedings that could lead to its closure.
The government is also considering a proposal to wind
down the watch-making division of HMT Machine Tool Limited after years of
losses that have forced it to borrow from the government to pay wages.
Trade unions are opposed to any moves to shut down
state firms and the Bharatiya Mazadoor Sangh (BMS), a body affiliated to the
ruling Bharatiya Janata Party, said it would work with other unions to block
“We are co-ordinating with all central trade unions on
the matter. We are fortunate that all trade unions are on the same page when it
comes to these issues,” said Vrijesh Upadhyaya, general secretary of the BMS.
Prime Minister Narendra Modi’s administration, which
took office in May pledging to reignite growth, has embarked on a cautious
course of shedding stakes in state firms although it has eschewed big moves.
Officials said the government was also looking for
ways to revive some of the sick companies through capital infusion, joint
ventures and by bringing in new management.