In a significant move to strengthen governance, the Indian Parliament is set to dramatically expand its scrutiny of central public sector enterprises (CPSEs). This enhanced oversight comes as the government aggressively pursues growth in strategic areas like nuclear energy and rare earths, while simultaneously opening new sunrise sectors to private investment.
Unprecedented Scrutiny for Strategic State Firms
Baijayant Panda, chairperson of the Committee on Public Undertakings (COPU), revealed that the 22-member parliamentary panel aims to review close to two dozen public sector units before the end of its current term. This marks a substantial increase from just four reviews conducted in the final year of the previous Lok Sabha.
The timing of this intensified oversight is critical. State-run companies contribute massively to the Indian economy, with their combined sales accounting for approximately 11.2% of the nation's nominal GDP in FY25, translating to an annual turnover of ₹37 trillion. Despite their scale, only 66 out of 291 operational central PSUs are listed on stock exchanges.
Panda emphasized that the committee is deliberately focusing on sectors that have historically escaped review. "Typically, only very large profitable companies were being reviewed, like the petroleum companies, but smaller strategic companies are equally important," he stated. For instance, the Nuclear Power Corporation of India (NPCIL) and Indian Rare Earths Ltd were reviewed for the first time ever by the committee, highlighting their strategic significance amid global supply chain challenges and trade wars.
Driving Performance and Compliance in the Public Sector
The committee's role involves a thorough examination of the physical and financial performance, safety compliance, and research initiatives of state-run companies. It gathers evidence from company executives and relevant ministries before making recommendations that influence policy and operations.
This heightened scrutiny is expected to lead to better regulatory compliance. Corporate governance experts have pointed out lingering issues. "Several public sector enterprises have been lagging in terms of compliances," noted Shriram Subramanian, MD of InGovern Research Services. He highlighted recurring problems like vacancies in top posts and boards not meeting requirements for independent or women directors.
"Government-backed companies need to set an example for private players in terms of regulatory compliances," Subramanian added, underscoring the broader impact of robust PSU governance.
Strategic Sectors and Economic Contribution in Focus
The review aligns with major policy shifts, notably the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (Shanti) Act, which opens the civil nuclear energy sector to private participation. India has an ambitious plan to ramp up its nuclear power capacity to 100,000 megawatts (MW) from the current 8,700 MW, which constitutes less than 2% of total installed capacity.
Panda explained the rationale, stating, "100,000MWs mean the private sector will come in, and maybe it can contribute half of that. But our existing nuclear power generation has to go up to 50,000MWs at least."
Beyond strategic oversight, the performance of CPSEs remains a cornerstone of national development. In FY25, 226 out of 291 operating PSUs were profitable, recording cumulative profits of ₹3.08 trillion. Their combined contribution to the central exchequer, through dividends and taxes, stood at a substantial ₹4.94 trillion, providing crucial financing for government initiatives.
Panda cited positive examples of adaptation, such as the Container Corporation of India thriving despite new private competition, and the Food Corporation of India (FCI) leveraging drones and AI for efficient inventory management. "The Indian public sector in many areas is actually doing very well," he concluded, signaling that improved efficiency in these enterprises is a vital indicator of broader economic health.
