Opinion | Decoding The Mega PSU Revival Under PM Modi
Turning around loss-making PSUs is not merely about restructuring them or infusing fresh capital; bold and drastic measures are often paramount
State-owned telecom operator Bharat Sanchar Nigam Limited (BSNL) has recorded a net profit of Rs 262 crore for the December 2024 quarter, marking its first quarterly profit in 17 years.
This is a significant turning point for the company, with the revival happening thanks to its service expansion, cost-cutting measures and growing subscriber base. BSNL saw revenue growth of 14-18 per cent across its mobility, Fiber-to-the-Home (FTTH), and leased line services compared to the same period last year. The telco’s subscriber base also climbed from 8.4 crore in June 2024 to 9 crore by December 2024. This December quarter profit is the first since 2007. Additionally, the company slashed finance costs and overall expenditure, reducing losses by over Rs 1,800 crore compared to the previous year. Its EBITDA (earnings before interest, taxes, depreciation, and amortisation) doubled in the last four years, reaching Rs 2,100 crore in FY 2023-24.
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BSNL has been enhancing customer offerings with services such as National WiFi Roaming, BiTV (free entertainment for mobile users), IFTV (for FTTH customers), and India’s first private 5G connectivity for mining. The company is now focused on nationwide 4G rollout. Of 100,000 planned towers, 75,000 have been installed and close to 60,000 commissioned. The aim is to have all towers operational by June 2025. With continued revenue growth and controlled expenditures, BSNL aims to sustain profitability and further strengthen its position in India’s telecom sector.
Turning around loss-making PSUs is not merely about restructuring them or infusing fresh capital. Sometimes, the decision to shed flab is not enough. Bold and drastic measures are often paramount. In that context, the government’s bold move to exit Air India completely in 2021-22 speaks volumes about Prime Minister Narendra Modi’s mantra of “minimum government, maximum governance".
After being sold to the Tata Group, Air India shaved off its losses by 60 per cent to Rs 4,444.10 crore in FY24 over the previous year. The airline had reported a loss of Rs 11,387.96 crore in FY23. The Tata group further consolidated its aviation presence with the merger of AirAsia India (AIX Connect) with Air India Express and the merger of Vistara with Air India. Air India recorded its highest consolidated annual operating revenues of Rs 51,365 crore in FY24, up 24.5 per cent over FY23, driven by growth in capacity to 1059-million available seat kilometres, which was 21 per cent higher over the previous year.
The privatisation of Air India by the Modi government has worked wonders. Don’t forget, this air carrier was making losses at the rate of Rs 20 crore a day, prior to its privatisation in 2022. It also saw an improvement in passenger factor to 85 per cent against 82 per cent in FY 2022-23. During FY 2023-24, 40.45 million passengers were flown by operating 800 daily flights, including 55 domestic and 44 international destinations. Vistara operated its last flight under its banner on November 11, 2024, and its operations were merged with Air India on November 12, 2024.
Sharing data on the improvement in operational parameters since January 27, 2022, when the government handed over the ownership and management of the airline to the Tatas, Air India said it had been able to double its average daily revenue by raising aircraft capacity by 27 per cent to 100, increasing flights by 30 per cent and flying 72 per cent more passengers by 2023, within just one year of privatisation. The airline, which aims to be a globally recognised brand in the next five years, has also focused on its international expansion and added 16 new routes and increased frequencies on as many as nine other routes. This allowed it to increase its weekly international flights by 63 per cent. The airline was able to clock the best OTP across all airlines in 2023, with 90.98 per cent of its flights taking off or departing on time. This stood at an average of 70 per cent in 2021.
Another issue of concern among passengers was delay in response from customer care. The airline has more than doubled the manpower at its call centres, thereby reducing the average wait time by almost 90 per cent. It has also been able to clear a backlog of a whopping 10 lakh aged or legacy refunds, between 2022 and 2023 alone. PM Modi often says the government has no business being in business and selling Air India to the Tatas was a brilliant move, endorsing exactly that. Air India has seen significant growth in employment opportunities, with over 7500 new employees (both flying and ground staff) having joined the company since privatisation. So, far from losing jobs, thousands have joined the company. Air India has been in the process of acquiring 470 aircraft from Boeing and Airbus for its fleet expansion at an estimated cost of $70 billion.
Coal India Ltd (CIL), owned by the Union government, is yet another example of how the Modi government has truly lived up to its promise of “minimum government, maximum governance". The company’s performance has seen a sharp turnaround in the last few years.
Talking of PSBs, SBI, the “banker to every Indian", has huge strengths like its branch network of over 22,000, a strong brand recall and ammunition like comfortable liquidity buffers. The average balance in a savings account in SBI is three times higher than the nearest competition, which effectively means that the average saving account balance improved to Rs 17 lakh crore in June 2024 from Rs 12 lakh crore in March 2020.
Let us turn the clock back to 2012. The bank had a net profit of just Rs 1,583 crore in the April-June quarter of 2011-12 (FY12) fiscal. The sharp jump in NPAs in 2012 was attributed to inability of corporates and other borrowers to repay the loans on time, mainly on account of pathetic performance of the economy under the erstwhile Congress regime.
Now circle back to 2025. The percentage of gross NPAs or non-performing assets of SBI was barely 2.07 per cent in Q3FY25 from 2.42 per cent in Q3 FY24. On a QoQ basis, too, the figure saw an improvement, versus the 2.13 per cent figure in Q2 FY25. The net NPA figure in Q3FY25 came in at 0.53 per cent vs 0.64 per cent YoY. Credit growth at 13.49 per cent YoY in Q3FY25 with domestic advances growing by 14.06 per cent YoY and with gross advances crossing Rs 40 lakh crore, is a stellar endorsement of Modinomics and how it has reinvigorated the banking landscape, including the massive turnaround of India’s biggest public sector lender, SBI.
CASA ratio stands at 39.20 per cent as of December 31, 2024. SBI, for the quarter ended December 2024 (Q3FY25), reported a sharp 83 per cent year-on-year (YoY) surge in standalone net profit to Rs 16,891 crore. The net interest income for Q3 stood at Rs 41,445.51 crore, up 4 per cent YoY. The provision coverage ratio (PCR) at 74.66 per cent improved by 49 bps YoY. Slippage ratio for 9MFY25 improved by 8 bps YoY and stands at 0.59 per cent. Slippage ratio for Q3FY25 improved by 19 bps YoY and stands at 0.39 per centCredit Cost for Q3FY25 stands at 0.24 per cent. PCR with AUCA is 91.74 per cent. AUCA represents accounts to the extent fully provided and transferred to a separate head called advance under collection account (AUCA) with a clear purpose of cleaning the balance sheet. The balance in AUCA as of 31st December 2024 is Rs 1.75 lakh crore.
Central public sector enterprises (CPSEs) under the Modi government have seen a tremendous 150 per cent growth in their combined net profit from Rs 1.29 lakh crore in FY14 to Rs 3.22 lakh crore in FY24. That figure was Rs 2.18 lakh crore in FY23. The top five CPSEs with the highest net profits were Oil & Natural Gas Corporation Ltd, Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd, NTPC Ltd, and Coal India Ltd. Dividends declared by CPSEs in FY24 rose 16.3 per cent to Rs 1.23 lakh crore compared with Rs 1.05 lakh crore in FY23.
For example, Hindustan Aeronautics Limited (HAL) saw its market valuation skyrocket by 1452 per cent in merely 5 years, rising from Rs 17,398 crore in 2020 to Rs 2.7 lakh crore as of March 2025. The company is virtually debt free. It has a healthy interest coverage ratio of 240.58. The company has been maintaining an effective average operating margins of 24.99 per cent in the last five years. As of December 2024, HAL’s order book stands at approximately Rs 1.33 lakh crore, with the potential to reach Rs 2.5 lakh crore by FY26, driven by orders for aircraft like the Tejas Mk-1A and helicopters like the Prachand.
The capital employed by CPSEs also rose by 119 per cent to Rs 38.16 lakh crore on March 31, 2023, compared to Rs 17.44 lakh crore on March 31, 2014, finance minister Nirmala Sitharaman said. During the 1999-2004 period of the NDA regime, the PSU index soared over 300 per cent, vastly outperforming the BSE Sensex’s 70 per cent gain. In comparison, under UPA -1 (2004-09), the PSU index rose by 60 per cent, but this was only half the growth rate of the Sensex. During 2009-14 (UPA II), the PSU index declined by 6 per cent, while the benchmark rose by 73 per cent. Despite volatile markets, the 10 biggest market cap contributors to the BSE between March 17, 2025, and March 24, 2025, were Hindustan Aeronautics (HAL), State Bank of India (SBI), Life Insurance Corporation (LIC), Indian Railway Finance Corporation (IRFC), NTPC, Oil & Natural Gas Corporation (ONGC), Power Grid Corporation of India, Coal India, Bharat Electronics, and GAIL (India), whose market capitalizations surged by anywhere between Rs 49,155 crore and Rs 15,353 crore, each.
In the last 10 years, as of May 2024, PSUs have been the biggest outperformers. Bharat Electronics Limited (BEL) tops the chart, with nearly 16 times returns followed by ITI with 15.5 times returns. Others include NBCC (India), SJVN and Hindustan Petroleum Corporation (HPCL) with 7.9 times, 5.8 times and 5.1 times returns, respectively. In percentage terms, BEL’s returns stand at a whopping 1,488 per cent followed by ITI at 1,449 per cent. For NBCC, SJVN, and HPCL, the returns are between 689 per cent and 410 per cent.
Under the leadership of PM Modi, PSUs are thriving, benefiting significantly from the culture of professionalism infused in them along with increased operational freedom. The Modi government’s focus on capital expenditure has also helped. Management incentives such as sharpening of performance-linked bonus, capital management guidelines on dividends, buybacks, etc., and calibration of the disinvestment strategy have played a key role in improved performance of the CPSEs. GNPAs (gross non-performing assets) in PSBs have fallen to decadal lows of less than 3.2 per cent and profits are at record highs, even as the push to financial inclusion brings formal banking to every corner of the country.
The total paid-up capital of all CPSEs jumped 155 per cent to Rs 5.05 lakh crore on March 31, 2023, as compared to Rs 1.98 lakh crore on March 31, 2014. Total gross revenue of CPSEs in FY23 was Rs 37.90 lakh crore against Rs 20.61 lakh crore in FY14, an 84 per cent growth. The total contribution of CPSEs to the exchequer in taxes and dividends was Rs 4.58 lakh crore in FY23, a 108 per cent jump over Rs 2.20 lakh crore in FY14. The net worth of CPSEs also increased from Rs 9.5 lakh crore on March 31, 2014, to Rs 17.33 lakh crore on March 31, 2023, an increase of 82 per cent.
A stellar example of how PSUs and PSBs under the Modi government have staged a handsome turnaround is SBI, with the bank’s net profit over the past four financial years significantly surpassing the cumulative profits of the previous 64 years. In the last four years, SBI has earned a net profit of Rs 1.63 lakh crore. The same for the 64 years prior to that was only Rs 1.45 lakh crore.
Currently, SBI’s run rate is a smart Rs 17,000 crore worth of net profit every quarter. The bank has improved on the productivity front as well, with profit per employee growing by nearly six times to Rs 30 lakh in the last few years, clearly endorsing the fact that PSUs and PSBs under the aegis of the Modi government have had a brilliant turnaround in more ways than one.
The author is an economist, national spokesperson of BJP and author of the bestselling book ‘The Modi Gambit’. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18’s views.
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