Understanding the Impact of Navratna Status on Key PSUs

Understanding Navratna PSUs

A Navratna PSU (Public Sector Undertaking) is an enterprise owned by the central government of India, distinguished by its exceptional performance, which grants it enhanced financial and operational autonomy. This status allows these organizations the flexibility to make strategic decisions, invest in various projects, and expand operations without needing extensive government approvals.

Benefits of Being a Navratna PSU

Navratna PSUs enjoy a range of key advantages that bolster their operational capacity:

• Increased Financial Autonomy: They can invest up to ₹1,000 crore or 15% of their net worth in a single project without prior government approval. Additionally, they can invest up to 30% of their net worth in a fiscal year, provided the amount does not exceed ₹1,000 crore.
• Operational Flexibility: Navratna PSUs can establish overseas subsidiaries, form joint ventures, and enter technology collaborations, facilitating global expansion and operational optimization.
• Organizational Restructuring: These companies possess the authority to restructure internally, create new profit centers, and open offices both domestically and internationally, enhancing their responsiveness to market conditions.
• No Monetary Ceiling for Capital Expenditure: There is no limit on capital expenditure for new projects or replacements, allowing them to pursue large-scale investments that drive growth.

Criteria for Becoming a Navratna PSU

To qualify for Navratna status, a Central Public Sector Enterprise (CPSE) must fulfill several criteria:

• Miniratna Category I Status: The enterprise must already be classified as a Miniratna Category I and listed under Schedule ‘A’ of CPSEs.
• Consistent Performance: It must have consistently been rated as "Excellent" or "Very Good" under the Memorandum of Understanding (MoU) system for at least three out of the last five years.
• Composite Score: The company must achieve a composite score of 60 or above based on six key performance indicators, including net profit, manpower cost, and earnings per share.

Current Navratna PSUs

With the recent elevation of NHPC, SJVN, RailTel, and Solar Energy Corporation of India (SECI) to Navratna status, the total number of Navratna PSUs in India has reached 25. This designation empowers these companies with greater autonomy in financial and operational aspects, enabling them to undertake larger projects and expand their market presence both domestically and internationally.

Conclusion

The Navratna status represents a significant milestone for these companies, equipping them with the necessary tools and flexibility to drive growth, enhance operational efficiency, and strengthen their competitive position in the global market.

Frequently Asked Questions (FAQs)

Q1. What are Navratna PSUs?
Answer: Navratna PSUs are public sector enterprises in India granted enhanced autonomy due to outstanding performance, allowing them to make strategic decisions with less government intervention.

Q2. How many Navratna PSUs are there in India?
Answer: As of now, there are 25 Navratna PSUs in India, including NHPC, SJVN, RailTel, and SECI, which have recently achieved this status.

Q3. What benefits do Navratna PSUs have?
Answer: Navratna PSUs enjoy increased financial autonomy, operational flexibility, and the ability to restructure without monetary ceilings, empowering them to invest significantly in growth.

Q4. What criteria must a PSU meet to become a Navratna?
Answer: A PSU must have Miniratna Category I status, consistent performance ratings, and a composite score of 60 or above based on key performance indicators.

Q5. Why is Navratna status important for PSUs?
Answer: Navratna status is crucial as it provides PSUs with the independence needed to make significant investments and compete effectively in both domestic and international markets.

UPSC Practice MCQs

Question 1: What is a Navratna PSU?
A) A type of private sector company
B) A government enterprise with enhanced autonomy
C) A non-profit organization
D) A foreign investment firm
Correct Answer: B

Question 2: How many Navratna PSUs are currently recognized in India?
A) 20
B) 22
C) 25
D) 30
Correct Answer: C

Question 3: Which of the following is a benefit of being a Navratna PSU?
A) Limited investment opportunities
B) High government control
C) Increased financial autonomy
D) Restricted international operations
Correct Answer: C

Question 4: To qualify as a Navratna PSU, a company must be classified as which of the following?
A) Miniratna Category II
B) Miniratna Category I
C) Maharatna
D) None of the above
Correct Answer: B