Do we need PSU at all?

THE NIRAV MODI scandal at Punjab National Bank has brought the state of affairs at public sector banks into sharp focus. Questions are being asked about the manner in which such banks function and the quality of their management. But broaden the canvas, and many of the problems can be found to be endemic not just in banks but across the public sector as a whole. There are several public sector undertakings (PSUs) owned by the central and state governments which have been running up losses for years as the government dishes out money to keep them going. Consider some figures. The losses racked up by 150-plus PSUs in India over the last two fiscals add up to a staggering Rs 102,354 crore, with very few solutions in sight. Hence, in our cover story, we ask, do we need PSUs at all? Barring a few strategically important sectors, there seems to be very little logic for the government to be involved in running disparate businesses. But, as Ashish Gupta and Debabrata Das write, it’s not easy for governments to kill off PSUs. Neeraj Gupta, secretary of the government’s department of investment and public asset management, admits that it hardly makes sense for the government to keep selling land in a bid to keep the dead assets alive. The challenge for the government, then, is huge.But it’s not all bad news. On the flip side, lists editor Rajiv Bhuva has a few figures which should provide some relief to the government. The 2018 Fortune India list of India’s Most Profitable PSUs—the listing of the 50 top government-owned entities—has thrown up an aggregate gross profit figure of Rs 262,354 crore. But, slice and dice the list a little, and there are some interesting takeaways.