How PSUs performed under the Modi Era? FM Sitharaman has an answer

PSUs on Growth Path: India's Public Sector Undertakings (PSUs) are experiencing a revival. Dispelling notions of decline, the PSUs are growing like never before, at least the numbers and financial metrics suggest so. Contrary to past perceptions of stagnation, recent data unveils a remarkable resurgence in these state-owned entities' financial vigour and market appeal. In a reply to Rahul Gandhi over the claim that Public Sector Undertakings (PSUs) are being dismantled and are in disarray, Finance Minister Nirmala Sitharaman took to X and said, “Modi Govt's focus on capital expenditure has also led to substantial growth in their stock performance.” 

She added further that the greater alignment of management incentives (through the sharpening of performance-linked incentives),  Capital Management Guidelines on dividends, buybacks, etc. and the calibration of the disinvestment strategy have helped improve the performance of the CPSEs and reposed investor confidence. She also threw light on various metrics of PSUs to show that they are on a growth path. 

PM Modi in February this year, in his recent address to Parliament, lauded the increased investor confidence in Public Sector Units (PSUs) under the BJP-led NDA government. He cited notable achievements such as the record surge in share prices of state-owned units like LIC and HAL, highlighting the growth and resilience of India's PSUs.

PM Modi highlighted the uptick in share prices of key PSUs such as Life Insurance Corporation (LIC) of India and Hindustan Aeronautics Limited (HAL), signalling a newfound investor enthusiasm for the government-owned entities. He noted that the number of PSUs has risen from 234 in 2014 to 254 presently, with many of them delivering record returns, drawing significant attention from investors.

Modi also revealed that the net profit of these entities surged from Rs 1.25 lakh crore between 2004 and 2014 to Rs 2.50 lakh crore. Additionally, their net value witnessed an impressive 79 per cent increase, soaring from Rs 9.5 lakh crore to Rs 17 lakh crore. This substantial growth underscores the efficacy of government policies in fostering fiscal strength and resilience within the public sector. 

Booming Profits

Similarly, FM Sitharaman also highlighted that between FY 2022-23 and FY 2013-14, the total Paid-up Capital of all CPSEs was Rs 5.05 lakh crore as of March 31, 2023, v/s Rs 1.98 lakh crore in FY 14, an increase of 155 per cent. FM Sitharaman also mentioned total gross revenue and added that the total gross Revenue from the operations of CPSEs during FY 2023 was Rs 37.90 lakh crore v/s Rs 20.61 lakh crore in FY 14, an increase of 84 per cent. Net Profit of profit-making CPSEs stood at Rs 2.41 lakh crore in FY 2023 v/s Rs 1.29 lakh crore in FY14, an increase of 87 per cent.

Market Cap

Market Cap of 12 listed Public Sector Banks (PSBs) has increased 2.95 times (195 per cent) from Rs. 5.45 lakh crore (as of 31.3.21) to Rs. 16.12 lakh crore (as of 31.3.24). In addition, 15 CPSEs have experienced an impressive  CAGR ranging from 76 per cent to 100 per cent, reflecting substantial value appreciation and investor confidence. Additionally, 25 CPSEs have demonstrated strong growth with CAGR ranging between 51 per cent to 75 per cent, while 28 CPSEs have shown steady expansion within the range of 26 per cent to 50 per cent.