Recently, Union Finance Minister Nirmala Sitharaman took to X (formerly twitter) to target the allegations imposed by the Congress party. The Congress alleged that the ruling BJP did not handle the PSUs in India properly. FM Sitharaman replied to this allegation on twitter.
According to Union Finance Minister Nirmala Sitharaman, the total market capitalisation of all 81 public sector undertakings (PSUs) has increased by 225% in the last three years. These PSUs include 62 central public sector enterprises (CPSEs), 12 public sector banks (PSBs), three public sector insurance companies (PSICs), and IDBI bank.
Performance of NIFTY CPSE
Sitharaman mentioned that the NIFTY CPSE has provided returns of 78.8% in the last 36 months, outperforming both the NIFTY 500 (27.4%) and NIFTY 50 (22.5%).
Market Capitalisation of Listed PSBs
The market capitalisation of 12 listed public sector banks (PSBs) has surged by 195%, from ₹5.45 lakh crore on March 31, 2021, to ₹16.12 lakh crore on March 31, 2024.
Growth of CPSEs
Sitharaman highlighted that 15 CPSEs have experienced an impressive compound annual growth rate (CAGR) ranging from 76% to 100%, reflecting substantial value appreciation and investor confidence. Additionally, 25 CPSEs have demonstrated strong growth with a CAGR ranging between 51% to 75%, while 28 CPSEs have shown steady expansion within the range of 26% to 50%.
Valuation of Hindustan Aeronautics Limited (HAL)
The valuation of Hindustan Aeronautics Limited (HAL) has increased by 1,370% in just four years, from ₹17,398 crore in 2020 to ₹2.5 lakh crore as of May 7, 2024. HAL also announced its highest-ever revenue of over ₹29,810 crore for the fiscal year 2023-24 and has a robust order book of over ₹94,000 crore.
Impact of Disinvestments on PSUs
Sitharaman explained that disinvestments have not only improved the operations of PSUs but also benefited employees. She cited the example of Air India, where the government ensured that there would be no removal or retrenchment of employees for a period of one year. After one year, a voluntary retirement offer was provided before retrenchment, ensuring favorable terms. Air India has seen significant growth in employment opportunities, with over 7,500 new employees joining the company since privatization.
Turnaround of Neelachal Ispat Nigam Ltd (NINL)
Sitharaman mentioned that a similar turnaround has happened in Neelachal Ispat Nigam Ltd (NINL) after privatization. The operations of the plant have shown a perceptible turnaround, and the plant started operations within three months of acquisition after October 2022. Additionally, the unpaid employee dues of ₹387.08 crore were also cleared.
Strengthening of PSBs
Sitharaman emphasized that the government’s continuous efforts to reduce non-performing assets (NPAs) and strengthen the health of public sector banks (PSBs) are showing tangible results. The PSBs have reported increased net profits, with all twelve PSBs together declaring a net profit of ₹25,685 crore in the second quarter of the fiscal year 2021-22.
Call for Increased Capital Expenditure
Sitharaman urged central public sector enterprises (CPSEs) to boost their capital expenditure (capex) and achieve their targets. She emphasized the important role played by CPSEs in pushing the economy forward and stated that a better performance from CPSEs can substantially improve the recovery prospects of the economy.
Importance of Fraud Prevention and Detection
Sitharaman instructed PSBs to adopt advanced fraud prevention and detection mechanisms and ensure that customers are educated about safe banking practices. She highlighted that bank frauds pose a critical threat to the security of individual customers and financial institutions, leading to financial losses and reduced public trust in the banking system.