<b>XIII LOK SABHA DEBATES, <i> Session II (Winter Session) </i> </b>
XIII LOK SABHA DEBATES, Session II (Winter Session) Friday, December 10, 1999/Agrahayana 19, 1921 (Saka )

Title: Further discussion on the resolution moved by Shrimati Geeta Mukherjee regarding sick public sector undertakings on the 3rd December, 1999. (Resolution withdrawn).

15.00 hrs.

MR. CHAIRMAN: We will go to Private Members' Business. Four names are there. The remaining available time is 29 minutes. Shri Moinul Hassan, please.

SHRI MOINUL HASSAN (MURSHIDABAD): Respected Chairman, Sir, on this occasion, I would like to recall the old age when the Public Sector Units were started. At that time, what was the object and aim to build up a public sector enterprise in our country? Firstly, it is to help in the rapid economic growth by way of industrialization of the country. Secondly, it is to promote redistribution of income and wealth and thirdly to create employment opportunities.

1503 hours (Shrimati Margaret Alva in the Chair)

At that time, for our great newly independent country, self-reliance was an important task. If we have gone through the records, the speech of our first Prime Minister, Pandit Jawaharlal Nehru, has enthused the whole nation to build up this nation. So, I suppose in the early days, Public Sector Units were very much related to our nation building. Not only that, it is not suffice to say that it is the backbone of our economy.

I would like to go through the present performance now. Respected, Madam, for the decades, the PSUs have played one important role to build up our national economy. Even today, I would like to quote from the last report. Out of 240 PSUs, 45 are rated as excellent and 25 are rated as very good.

These 240 PSUs increased their net profit by 37.36 per cent in 1997-98, compared to the previous year. This is the present performance of our beloved public sector enterprises. Right from 1991 when the story of open nation and globalisation has started, black days have started for the public sector units. In 1996, the Disinvestment Commission has decided to open the public sector to the private sector. But why this sickness has come now? There are so many reasons for that and I would like to go into some specific points.

These public sector units are traditional enterprises and, therefore, most of them are aging plants. Since long there has been no modernisation. There is lack of competitiveness, there is lack of funds, there is lack of electricity and there is incapability of management also. But what is the Government's attitude to overcome these problems! On 3rd February, 1992, a National Renewal Fund was set up. What was the allocation of Fund! The allocation in 1992-93 was Rs.829.66 crore; in 1993-94 it was Rs.1,020 crore; in 1994-95 it was Rs.200 crore; in 1995-96 it was Rs.140 crore; in 1996-97 it was Rs.150 crore; in 1997-98 it was Rs.306 crore; and the Budget Estimate for 1998-99 was Rs.300 crore. Not only that, this Fund has not been properly utilised also. Besides that, this Fund is not in a position to revive our sick industries. I am very sorry to say that the Government is very much eager to give us VRS but not to revive a sick unit.

I would just like to mention about the jute industry in the country as a whole and in West Bengal, in particular. Most of the jute mills are closed. There is no plan for modernisation. There is no adequate plan for diversification of products. The Jute Research Centre is nothing but a rehabilitation centre for Government officials. They are doing nothing. What about the National Jute Manufacturing Corporation? No steady funds flow to this Corporation from the Government of India. Large amounts are due to this Corporation and the common farmers are suffering. Yesterday I had seen that only Rs.46 crore have been allocated for NJMC in the Supplementary Demands. I think this will be spent for paying the salary and TA/DA, and the payment of dues will be withheld. Everybody is talking about the dues to NJMC from big businessmen, but nobody is talking about the dues from the NJMC to the cooperative sector. A large number of farmers are connected with the cooperative sector. I would specifically like to say that nearly Rs.7 crore are due from the NJMC to the cooperative sector in West Bengal. Particularly in my district, Rs.2.5 crore are due from NJMC to the cooperative sector

This is the process of how a Government undertaking becomes sick. This is the attitude of the Government. So, I urge upon the Government on this occasion that a comprehensive programme to revive a sick industry is needed. It is needed since long and it has already waited for years. The public sector enterprise is our national sector. It is repeatedly said not only by me but speaker after speaker that public sector units built our nation since Independence. So, with the slogan `Save PSU and Save Nation', I would urge upon the Government to come forward to save PSUs.

With these words, I would conclude. Thank you.

SHRI M.O.H. FAROOK (PONDICHERRY): I just want to make through you to the hon. Minister, only one point. It is a good policy to have disinvestment, but the money you are getting from disinvestment should be invested only in those public sector industries wherein you need money. It should not be adjusted against Budget deficits. I wanted to impress upon the Minister this point.

A decision had been taken even during other days that disinvestment has to be made. I fully agree with you. But when you are making this disinvestment, the money which you are getting out of disinvestments should be used fully, out and out, in the industries which need it, as per the selection of the Government.

SHRI G.M. BANATWALLA (PONNANI): This is also the recommendation of the Disinvestment Commission.

SHRI M.O.H. FAROOK : Yes. But it has been said that the Finance Ministry and other Ministries have thought over it that it should be adjusted in the Budget, which I feel should not happen. In fact, if you go through the Budget, you would see that in the Budget, adjustments from the disinvestment have been put into, which should not happen.

I would like to warn the Minister and through the House, I would request the hon. Minister not to yield to that level. Otherwise, you will be in trouble. This is the only point I wanted to discuss with you and impress upon you. So, please take care of this matter.

SHRI RAMESH CHENNITHALA (MAVELIKARA): Madam Chairperson, I rise to support the resolution moved by Shrimati Geeta Mukherjee. It is a very important resolution. The contribution of the public sector undertakings in our country is great. The public sector undertakings are involved in nation-building activity since Independence. The founder of the modern India, Pandit Jawaharlal Nehru, the then Prime Minister promoted and helped to grow the public sector undertakings in our country. Nobody can forget the major contributions they have made to our country.

The workers of the public sector undertakings have also contributed a lot to the country. Today, we are living in a changed situation. The effect of globalisation and liberalisation is seen the world over, and India is also a part of that. In the changed environment, it has become difficult for the public sector undertakings to survive. So, in the changed circumstances, we have to evaluate the performance of the public sector undertakings, and we have to induce more strength in these public sector undertakings in order to compete with the other private agencies or institutions or companies.

As you know very well, the Government is not serious about the public sector undertakings. My colleague has rightly mentioned the reasons for the sickness in the public sector undertakings. We should ponder over the serious lapses on our side which caused the sickness in these industries. The public sector undertakings which were running profitably had become sick. For months and years together, certain public sector undertakings were functioning without Managing Directors or Chairmen. In the last Lok Sabha also, we had raised a question that 14 public sector undertakings were headless and that this inordinate delay in selecting the Chairmen of the public sector undertakings also contributed to the sickness factor. I am not blaming

anybody. The process is so lengthy that it takes months together to select a Chairman or a Managing Director of a Public Sector Undertaking. It is also causing a lot of problems.

Nobody can forget about the mismanagement in the public sector undertakings. For example, take the Cement Corporation of India. The amount of corruption and mismanagement are so much that, time and again, it was discussed in Parliament. I was a Member of the Public Undertakings Committee during the Twelfth Lok Sabha. When we had gone into this question, we came to know about certain shocking incidents and transactions. Factories were opened in certain areas where the raw-material was not available; the location of the factory was correct, and the imported machinery was totally defective. So many irregularities were seen in these public sector undertakings. Crores and crores of rupees were mismanaged. In some of the public sector undertakings, there was no effort from our side to modernise them; there was no effort for technological upgradation because there was no capital. The Government has not allotted any money for renewal or technological upgradation. Extravagance on the part of the management is also one of the major factors behind the institutions becoming sick. Nobody was also interested in productivity. At the State level as well as at the Central level, these public sector undertakings have become white horses, and nobody cares about production. Frequent strikes by workers was also one of the main reasons for this. Of course, now, the attitude of the workers has changed, and I agree. For example, take the case of FACT, which is one of the major public sector undertakings in our State. Now, the workers have come together to save the institution. The entire attitude of the workers is also changing and that is a good sign. In certain institutions, the callous attitude of the workers was also one of the reasons for the sickness of some of these public sector undertakings.

Sir, at the same time the Government agencies also are not giving them proper orders. For example, I would like to cite the instance of the Hindustan Latex which is one of the premier public sector undertakings in our country. They have two units -- one at Trivandrum and the other is located in your State, Madam, Chairperson, that is in Belgaum. These two units are becoming sick. It is because they are not getting orders from the Government. At the same time, the Mumbai based private companies are getting orders from the Union Health Ministry and this Public Sector Undertaking which is running in profit, which has the monopoly in the business and is also supplying to the Health Ministry is not getting orders. Unfortunately, on the other hand, the Health Ministry is giving orders to the Mumbai-based private companies. The products of these two units are piling up in Trivandrum and Belgaum. What will happen to them? After some days these units would become sick.

Madam, Chairperson, I would also like to cite the case of M/s Hindustan Paper Corporation. It has its headquarters at Calcutta. I do not understand as to why its headquarters should be at Calcutta. But that is a different matter. The management has to interact with the Ministers of various Ministries at Delhi but its headquarters is at Calcutta. Anyway, only one unit, namely, M/s Hindustan Newsmill Limited, which is situated in Kerala, is running in profit. The NEPA Paper Mills have closed down; the Mysore Paper Mills have closed down; the Madras Paper Mills is on the verge of closure, it is still surviving because they are a joint venture unit; the Nowgaon Paper Mills have also closed down. Almost all the other units are sick. Only M/s HNL is a profit-making unit. So, we have requested the Government that it should be separated from the Hindustan Paper Corporation. M/s HNL has got productivity award for three times consecutively. This unit should be separated from the Hindustan Paper Corporation.

Madam, Chairperson, I would like to make one thing very clear. If there is one unit which is running on profit, then why can we not separate it and make them survive instead of running the other organisations with their profit? After some days, this unit would become sick and it would also have to be closed down. The Mandya Paper Mills have already closed down and there is no chance of its revival. Now, the Government is paying the salaries of the employees of other sick units by taking the profit of M/s HNL. So, my request is that the Government should separate this unit from the Hindustan Paper Corporation so that, at least, this unit can survive. I have requested the hon. Minister to think seriously about this aspect.

Madam, Chairperson, why is HPC in such a condition? There are a lot of reasons for it. But the main reason is the Newsprint policy which we are adopting. The newsprints are being imported from other countries on zero duty and a lot of imports are being made. Moreover, there are no takers for the indigenously manufactured newsprint. Newsprint is being imported from foreign countries and is being dumped here. Even though Anti-dumping laws exist in our country, yet the Government of India has never invoked this provision to stop such dumpings. Therefore, our indigenously manufactured newsprints are going waste and our paper mills are becoming sick. We are not in a position to compete with the foreign companies in this regard because their cost of production is very low. Newsprints are coming from Canada and such other countries and we are importing them on zero duty.

Madam, Chairperson, earlier some protection were given to the Public Sector Undertakings but now no such protection is available to them. I think that the Government of India should take care of the Navaratnas, that is the Public Sector Undertakings which are doing well. The streamlining of the activities of the Navaratnas are very much necessary. Otherwise, after some time these organisations which were once doing well would also become sick.

The Government has to take stock of the situation and streamline the activities of the public sector undertakings so that they can survive. In the changed situation, the Government should give more preference and protect these organisations because the exchequer had spent crores and crores of rupees on these public undertakings.

With these words, I conclude.

DR. V. SAROJA (RASIPURAM): Hon. Madam, Chairperson, thank you for giving me this opportunity to put forward a few facts about sick public sector undertakings on Private Members' Resolution moved by Shrimati Geeta Mukherjee.

Madam, after Independence it was felt that the political independence without economic self-reliance would be detrimental to country's sovereignty and autonomy in policy-making. The basic objectives of starting public sector undertakings were: to build up infrastructure for economic development; to promote rapid economic growth and industrialisation of the country; to create more employment opportunities; to promote more balanced regional development; to create a self-reliant economy through development of local industries by encouraging and promoting exports; to generate investible resources for development by earning suitable reserves; and lastly to prevent and reduce concentration of private economic power.

Madam, where are we going now? During 60s and 70s, the public sector policy was guided by the industrial policy. Today, the ultimate aim of the public sector undertakings is totally lost on the Government.

MR. CHAIRMAN : May I interrupt for a second?

The time which was allotted for this discussion has expired. If it is the opinion of the House, and if we have no objection, we can extend the time to complete the discussion. If everybody is agreeable, I will extend the time by one hour. There are quite a number of speakers and I think we will need at least one hour to complete it.


MR. CHAIRMAN: So, the time is extended by one hour.

DR. V. SAROJA : Madam, to a Starred Question on 18th December, 1998 in the Lok Sabha, the Government had replied that:

"Sick industrial central public sector undertakings are referred to BIFR for evolving revival/rehabilitation plan. As on 30th September, 1998, sixty-four sick public sector undertakings were registered with BIFR. Of these, revival scheme has been sanctioned in 21 cases of which two Central public sector undertakings have been declared as no longer sick and one has been divested and other are at different stages of implementation. BIFR have circulated draft scheme for eight Central public sector undertakings and 14 cases are under enquiry."

I would request the hon. Minister to underline that phrase, `no longer sick.'

Madam, is it that the BIFR has become a statutory body? Is it that the Government is depending only on BIFR report to close down all the public sector undertakings forgetting the time taken, the finances invested, and the human resources wasted? I would urge upon the Government to review the composition of BIFR. I understand that out of 14 members in BIFR, at present only three members are to decide about the fate of PSUs of this country.

Madam, Chairperson, I would like to draw the attention of this august House to a very important and viable pharmaceutical industry at Chennai. I am a doctor. I am a professionalist prescribing the drugs of IDPL. I know the standards of this drug company. My point is that out of Rs. 2 lakh crore of the Annual Budget of the Government of India, is it that difficult to earmark even only Rs. 8 crore to Rs. 10 crore for the revival of this IDPL pharmaceutical industry at Chennai?

The BIFR report has been submitted. All the conditions referred to by the BIFR had been adequately scrutinised. The plant was hived off and the following sacrifices were to be made by the workmen as per the package for the rehabilitation:

- the man-power strength was reduced from 1200 to 325;

- accepted revised work norms and responsibilities in all categories to shoulder additional workload due to reduction in strength;

- accepted job enlargement under multi-disciplinary system including redeployment with suitable training;

- accepted to keep in abeyance the wage revision for the first four years of the revival plan; and