27 ailing PSUs can be closed

Taking a cue from the National Common Minimum Programme, the Planning Commission has favoured winding up of 27 chronically sick public sector companies as recommended by the Board for Industrial and Financial Reconstruction.

In its mid-term appraisal (MTA) of the Tenth Plan, the commission has recommended that other sick companies should also be identified for winding up. The NCMP had said only chronically sick companies would be wound up.

"Pending the establishment of a national company law tribunal, the existing procedure of reference of sick companies to BIFR should continue," the commission said.

It also said the stalemate on repeal of Sick Industrial Companies Act (Sica) needs to be ended soon.

The commission said while exploring the possibility of revival of sick PSUs, advice of professional consultant should be sought. For drawing up the revival package, it recommended that minimum financial burden should fall on the government.

While the government takes responsibility of strengthening the equity base of the company, the additional funds should come from financial institutions as loans, it said.

The government will have to bear the burden of waiver of taxes, penalties, interest and even principal amount on past loans of these companies but it must not stand guarantee to loans provided for their revival, the commission said.