Good Monday I’d say. But then too much workload it seems! Anyway, today’s learnings – Industrial Policy Developments
Industrial Policy Developments – Features
- There is high regional imbalance in India’s industrial development which portrays a lopsided pattern of industrial development and industrialization.
- The concentration is a result of natural advantages and sometimes it is imposed by historical forces.
- The major reason for the regional imbalance are as follows – Geographical factors, natural factors (availability or congregation of natural resources and raw material availability at certain places), difference in natural conditions, failure of planning, attraction of investments by developed areas, residual effect of British rule, Less attention and opposition to regional imbalance, predominance of agriculture.
- Measures taken by Government of India are – Economic Planning, Industrial estates, special area development program (SEZ), fiscal measures, incentives for promoting investments in backward regions, development of agriculture based industries.
- Schemes undertaken by the government of India – DIPP introduced package of Industrial Incentive via the new Industrial Policy and other concessions for Special Category States, North East Industrial and Investment Promotion Policy (NEIIPP), Modified Industrial Infrastructure Upgradation scheme (MIIUS) and Integrated Leather Development Programme (ILDP)
- Major initiatives for manufacturing cities and industrial clusters – Delhi Mumbai Industrial Corridor, Chennai Bengaluru Chitradurga Industrial Corridor, Vizag Chennai industrial corridor, Amritsar Kolkata industrial corridor, Bengaluru Mumbai Economic Corridor
Public Sector Undertakings – Definition
- The government owned corporations are termed as Public Sector Undertakings (PSUs) in India.
- In a PSU Majority, 51% of more of the paid up share capital is held by central government or by any state government or partly by the central and one or more state governments.
- The CAG (Comptroller and Auditor General) audits the government companies.
- With respect to government companies, CAG holds the power to appoint Auditor and direct the manner in which Auditor will audit the company’s accounts.
- There are 3 Types of PSUs – Public Sector Enterprises (PSE), Central Public Sector Enterprises (CPSE) and Public Sector Banks (PSB)
- Under CPSE – There are 2 types – Strategic CPSE (which include arms, ammunition, allied items of defence, defence aircrafts, warships, atomic energy, railways transport) and Non Strategic CPSE.
- There are 3 status for PSUs – Maharatna, Miniratna and Navaratnas
- The eligibility for Maharatna are as follows – It should have an average annual turnover of Rs 20,000 Crores during the last 3 years, Investment decisions are that the Maharatna status empowers the boards of firms to take investment decisions upto INR 5,000 crore limits without the approval of the government and they are free to decide on investments upto 15% of their net worth in a project which is limited to an absolute ceiling of INR 5,000 crore. Expansion status mentions that Maharatna status empowers mega CPSE to expand their operations abroad and also emerge as global giants.
- The eligibility for Navratnas are as follows – They have a Schedule A and Miniratna Category 1 status, Have atleast 3 excellent or Very Good MoU (Memorandum of Understanding) ratings during the last 5 years, Investment decisions – The navratna Status empowers the PSEs to invest upto 1000 crores of 15% of their total net worth on a single project without seeking the approval from the government and in 1 year, these companies can spend upto 30% of the net worth which doesn’t exceed INR 1000 Cr. Expansion status mentions the freedom of Navratna CPSEs to enter into Joint ventures, form alliances and build subsidiaries abroad
- The eligibility for Miniratnas are as follows – Category I status, It should have made profit in the last 3 years consistently, pre tax profit should be more than 30 Crores INR in atleast one of the three years and also should have a positive net worth and for Category II, the CPSE should have made profit for the last three years continuously and should have a positive networth. Investment decisions include that Category II miniratnas have the autonomy to incur the capital expenditure without government approval upto 300 crore INR or upto 50% of their net worth whichever is lower. Expansion status mentions that Miniratnas can enter into joint ventures, set subsidiary companies and overseas offices but with certain conditions. This designation applies to PSEs which have made profits continuously for the last three years or have earned a net profit of Rs 30 Crore or more in one of the three years.
Role of Public Sector Undertakings
- PSUs have laid a strong foundation for the industrial development of the country and it is less concerned with making profits, so it plays a key role in nation building activities which eventually take the economy in the right direction.
- PSUs also provide leverage to the government (which is their controlling shareholder) to intervene in the economy directly or indirectly to achieve the desired socio economic objectives and maximise long term goals for the economy.
- PSUs also play a crucial role in pushing the agricultural economy to progression and help to develop Rural India and it also plays a substantial role in the rural development by providing basic infrastructural services to citizens.
Board for Industrial and Financial Reconstruction
- BIFR was a part of the Department of Financial Services, Ministry of Finance which was dissolved from December 2016.
- The objective of BIFR was to determine the sickness of industrial companies and to assist in reviving those which may be viable and shutting down the rest and all its proceedings referred to the NCLT (National Company Law Tribunal) and NCLAT(National Company Law Appellate Tribunal) as per provisions of the Insolvency and Bankruptcy code.
- BIFR was established under the Sick Industrial Companies (Special Provisions) Act 1985 and it started to function in 1987
- The SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) act of 2002 placed corporate debts outside the purview of BIFR
So this was all about Industrial Policy Developments. Stay tuned for more details!
