Sontosh Mohan Dev

Turn around of Public Sector – redeeming a pledge

A free wheeling interview with Minister of Heavy Industries and Public Enterprises, Mr. Sontosh Mohan Dev underlines the importance attached by the Minister to the pledge of the UPA that no viable public sector undertaking will be allowed to close. During its tenure, the UPA has done more than that. Today there is a plethora of Ratnas and mini Ratnas among the PSUs and they are only growing!

Sontosh Mohan Dev, the minister for Heavy Industries and Public Enterprises, is an accomplished administrator and a person of commitment. A thorough gentleman by nature, he believes in quiet work and never keeps a file pending. In his sprawling office in Udyog Bhavan, the thick marked files on his table disappear as quietly as they appear on the table. When you talk to him, one realises that the minister has his grip firmly on the ministry as he keeps reading out figures after figures flawlessly. It seems that he knows the ministry by heart.

It was not too long ago that the country was preparing itself for the end of an era. The erstwhile NDA government had written the obituary of the public sector in the country and one after the other there were proposals to privatise them. It would have been truly the end of the Nehruivian era, the era in which the principle of development and social responsibility were the catch words. An era where self reliance was the mantra and profitability a secondary goal. However, the NDA, in the name of liberalisation and globalisation was hell bent upon disbanding the public sector so that the private sector could thrive and profit become the sole motive of the governments. Social commitments and responsibilities were derided and looked down upon as ideas belonging to some alien planet. The people of this country had different ideas. They brought the UPA government to power, instead.

One of the important commitments made by the UPA government on taking office was to restore to the public sector the dignity and pre-eminent position that it had always occupied ever since it became the growth engine of development. To day the results speak for themselves. When the nation reposed confidence in PSUs they responded and are today competing with the best in the world. Even those units which were considered hopeless have shown signs of life and vitality and each one of them is making contribution that needs to be heralded.

Ajay Upadhyay of the Day After spoke to Mr. S.M. Dev in his Udyog Bhavan office and discussed on wide ranging issues from Public Sectors to the automotive policy. 

DayAfter: What is the state of public sector industries in India and do you have any hope of it’s revival?

Sontosh Mohan Dev: It is true that Public Sector was on the verge of collapse during NDA regime. There was a systematic plan to abolish both the Ministry and the Public Sectors. The Public Sectors were becoming sick increasingly. The machines had become obsolete and there was no capital to replace them. There were certain sick Public Sector units which did not have enough capital to even pay salary to their staff and workers for months.

But, when UPA govt. came into power, we made a commitment in the Common Minimum Program that we would not allow any Public Sector Unit to close down and we would also ensure that wages and salaries are paid to the staff and workers of even the sick Public Sector units.

We promised to clear liabilities of such Public Sectors and infuse necessary working capital in order to revive them and make them stand on their own.

As promised in the CMP, we started plans to revive nearly 48 public Sectors out of which 12 became viable and there are more which became self sustaining. There are some which have yet not been in a position to come back to normalcy but we have made arrangements that their workers, at least, get their salaries. 

DA: Can you name some of the Public Sectors which have been revived with the help of initiative taken by the Ministry.

SMD: Whereas PSUs like BHEL and Bharat Pumps and Compressors Ltd. have exploited the initiative to support PSUs and have raised their profitability significantly, the nearly sick PSUs like Bridge & Roof and Andrew Yule have made a welcome turnaround. Even a hopeless company like Heavy Engineering Corporation is on the revival path and its showing profit.

We are ensuring that the new capital injected brings better technology and enhances the morale of the workforce in order to raise efficiency. The high morale of the workforce is providing a new lease of life to the management which is geared up now to lead these PSUs once again with a sense of pride. 

DA: What is your vision about the role of Public Sectors in the Indian Economy? It was perceived that Public Sectors will die natural death in the new economic reforms.

SMD:  This perception is totally wrong. In the National Common Minimum Program, it is envisaged that strong and effective Public Sector is important for a healthy economy of the country. I am proud to say that the Public Sectors have lived upto the nation’s expectation. There is a great demand for what is being produced by the Public Sectors.

Respecting the commands of NCMP, Board for Reconstruction of Public Sector Enterprises (BRPSE) has been set up under our ministry. BRPSE looked into every PSU and their recommendations are being implemented.

I would like to say that under UPA regime, Public Sectors have been revived to the best of our ability and they have once again started playing a significant role in the nation’s economy.

Though our endeavour is to make Public Sectors as market oriented as possible so that they make their own profit but it is not necessary that if a PSU is producing something critical for the nation and is not making profit, we will close it down like some Private Sector player. It has it’s own role to play. 

DA: There were questions raised about the relevance and viability of eminent Public Sectors like Bharat Heavy Electricals Ltd. (BHEL). How is BHEL doing now?

SMD:  It is absolutely bogus to raise questions about BHEL’s role in the Power Sector of the nation. We are paying special attention to the growth of Navratna PSUs like BHEL. You’ll be surprised to note that in the year 2007-08, BHEL has earned Rs.4395 Crores as profit before tax on a turnover of Rs.21608 crores. It is important to note that the market capitalisation of BHEL had gone up from Rs.30,000 crores to Rs. 1,25,000 crores.

As the energy crisis deepens with the rise of the cost of Petroleum products, the significance of heavy electrical equipment manufacturers like BHEL will remain intact rather it will go up in future.

In the new avatar of BHEL, it will start manufacturing 800 MW unit capacity plants and for this it has signed an agreement with Alstom of France. This is quite an important development as the transfer of Super Critical Technology will help BHEL to increase it’s production capacity to 15,000 MW per annum by the year 2009. In fact, BHEL is preparing itself for contribution in the project “Power to All by 2012”. 

DA: What is happening to the fate of extremely sick PSUs? Is there any chance of revival for them?

SMD:  As I told earlier, it has been decided that no PSU will be closed or sold if there is any scope for improvement. We have to also look after starving workers. With our budgetary support, nearly 35,000 workers who were on the brink of starvation have got their dues cleared and they are back on the job. I consider this as a great service to the nation as this is possible only in PSUs. Any Private Sector company would have shut the shop under these conditions and the workers’ situation might have worsened further.  

DA: Mr. Minister, apart from running PSUs, your ministry also provides policy guidelines and maintains constant dialogue with various bodies for the growth of industry. Which is the most important sector you consider for driving the growth of industry in the country?

SMD:  I consider auto industry as the most significant sector to lead India in the 21st century. It is considered to be the new sunrise sector and to the mother industry for many down stream activities. I can say with satisfaction that India has become the hub of production for every major foreign auto and auto component manufacturer. As India has inexpensive infrastructure and abundant skilled labour with proper port facilities, the international giants like Skoda, Volkswagen, General Motors, Mercedes Benz, BMW, Ford  and Honda have already set up their shops in India. It is a great Indian story.

To facilitate the manufacturers attain high quality standard, we are setting up a world class testing centre called National Automotive Testing and R&D Infrastructure Project (NATRIP) with the help of Rs.1718 crores. We have also tied up with British Vechile certification agency. With all this we will begin certification of Type Model of automobiles. 

DA: It is considered that Chinese automobile Sector is growing very fast and it may over shadow the great Indian auto story.

SMD:  I can say with certainty that the Chinese quality of auto products is very poor. Comparing to China, our quality far superior and every manufacturer world wide is flocking to us. In order to facilitate this growth, we have prepared and Automotive Mission Plan 2006-16.

The plan envisage India to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with turnover of reaching USD 145 bn by year 2016. Currently, the automotive industry has achieved a turnover of USD 56.46 bn (2007-08).

We are committed to provide policy level and physical support so that we can meet the challenge in the next 10 years. We want that transfer of technology takes place faster in this area so that our growth is consolidated.

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