Centre merges dept of enterprises with finance ministry




The change should be seen in the context of this year’s budget announcement, where the finance minister placed special emphasis on asset monetisation, the second official said. (Arvind Yadav/HT PHOTO)


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The change should be seen in the context of this year’s budget announcement, where the finance minister placed special emphasis on asset monetisation, the second official said. (Arvind Yadav/HT PHOTO)

The government has carved out the department of public enterprises (DPE) from the ministry of heavy industries and put it under the umbrella of the finance ministry to monitor performance of state-run firms, monetise their assets better through divestment and strategic sales, and direct their procurements policies to boost local industries.

DPE has come full circle now. It came into existence in 1965 as the Bureau of Public Enterprises (BPE) in the Union ministry of finance as a centralised coordinating unit appraising the performance of public enterprises, two officials aware of the development said requesting anonymity. In 1985, BPE was shifted to the ministry of industry. Five years later it was made a department, and subsequently put under the ministry of heavy industries and public enterprises.

“DPE is brought to the finance ministry for direct and better coordination. The purpose is to improve efficiency of CPSEs [central public sector enterprises], effective monetisation of their resources that are lying idle and nudge them to promote ‘Aatmnirbhar Bharat’ [Self-reliant India] by procuring goods and services from within the country, particularly from MSMEs [micro, small and medium enterprises],” one of the officials cited above said.

The change should be seen in the context of this year’s budget announcement, where the finance minister placed special emphasis on asset monetisation, the second official said. Delivering her budget speech on February 1, finance minister Nirmala Sitharaman said: “A ‘National Monetization Pipeline’ of potential brownfield infrastructure assets will be launched.”

“CPSEs have idle or underutilised assets. For example, 156 of them have over 4,000 acres of prime land in various parts of the country, which could be made productive assets. Besides, the change will also facilitate government’s disinvestment programme,” this official added.

The budget on February 1 proposed monetising of land through Special Purpose Vehicles (SPVs) and closure of sick or loss-making CPSEs. The government has budgeted for 1.75 lakh crore as receipts from disinvestment in 2021-22.

Nilaya Varma, co-founder and CEO of consulting firm Primus Partners, said: “As stated by the finance minister in her Budget speech, the transfer of DPE to the finance ministry gives a strong indication of the government’s push towards disinvestments. The fiscal stress brought on by the pandemic has exacerbated the need for privatisation of public enterprises and monetisation of under-utilised assets. This move would also allow effective enablement of PSEs to align with the vision of boosting the domestic ecosystem by encouraging procurement through Indian MSMEs.”

The change in ministerial control of DPE was effected through a notification issued by the Cabinet Secretariat on July 6. Accordingly, the finance ministry will now have six departments – the department of economic affairs (DEA), the department of revenue (DoR), the department of expenditure (DoE), the department of financial services (DFS), the department of investment and public asset management (Dipam), and DPE. The ministry of heavy industries and public enterprises has now been renamed as the ministry of heavy industries (MHI).

The ministerial restructuring was, however, made public on Wednesday, hours before a cabinet expansion. The gazette notification said that the changes “shall come into force at once.”

According to the notification, DPE will coordinate matters of general policy affecting all public sector enterprises (PSEs), evaluate and monitor their performances, and review their capital expenditure plans. It will also undertake the “residual work relating to erstwhile Bureau of Public Enterprises [BPE] including Industrial Management Pool [of talented managers],” the notification said.

Other functions of DPE include counselling, training and rehabilitation of employees in CPSEs under voluntary retirement scheme, rendering advice relating to revival, restructuring or closure of a state-run firm and conferring them ‘Ratna’ status.

Based on financial performances such as turnover and net worth criteria, CPSEs are given ‘Maharatna’, ‘Navratna’ and ‘Miniratna’ status.

MHI will continue to administer the capital goods and automobile industries. As per the notification, it will continue to oversee 44 areas including central public sector enterprises Heavy Engineering Corporation Ltd, Bharat Heavy Electricals Ltd, HMT Ltd, Scooters India Ltd, Cement Corporation of India Ltd, Hindustan Newsprint Ltd, and Bharat Bhari Udyog Nigam.

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