A marked feature of Prime Minister Narendra Modi’s approach to economic governance is to get specific functions executed through corporate special purpose vehicles. The idea is not entirely new—the setting up of Solar Energy Corporation of India and National Skill Development Corporation, for instance, predates the Modi era. Yet, Modi put these companies on steroids, started a bunch of new ones. The idea is to create a hybrid of a government-controlled body and bestowing it with the efficiency and nimbleness of the private sector. It seems to be working.

Cut through red tape

Today, there are many companies that are vested with specific tasks — Energy Efficiency Services Ltd, Invest India Ltd, SECI, NSDC and the recently-formed Digital India Corporation, to name some. A few more are likely to be formed soon, for instance, the GSTN, the company that will be mandated with the task of running the IT backbone for the goods and services tax.

While Digital India Corporation is too new to be taken up for assessment, the performance of others is open for judgement. Going by the numbers, all have performed very well.

Take Invest India, for instance. The government owns 49 per cent of it, so technically it is not a public sector undertaking. (The other 51 per cent is held by three industry bodies — FICCI, CII and Nasscom.) Invest India’s remit is not to make money for the shareholders, but to facilitate investments into India, hand-hold investors through the bureaucratic maze. In the 18-odd months of its existence, the company has handled over 70,000 investor queries, brought in over $62 billion of investment commitments, of which around $ 4.5 billion have been made.

Invest India has been successful due to one blessing it has — freedom. Its Managing Director and CEO, Deepak Bagla, has complete operational independence and though the MD reports to the Chairman, who is the Secretary of the Department of Industrial Policy and Promotion. Invest India has direct access to the PMO, which helps in cutting red-tape.

Unlike Invest India, Energy Efficiency Services Ltd is a for-profit company, which is expected to make money for its shareholders, who are four power sector PSUs — NTPC, PGCIL, PFC and REC. EESL is profitable, its mandate is to pull out the energy inefficient electrical gadgets in use (such as incandescent bulbs) and replace them with energy efficient ones (such as LEDs) through a model that lets the customer pay for the costlier replacements out of their savings in energy bills. The company has no option but to be for-profit because it needs capital to make upfront investment in energy efficient gadgets.

EESL seems to have clicked, it is planning an IPO. But more than profits, its efforts have helped avoid 6 GW of peak time power, save 30 billion units of electricity, worth ₹12,000 crore, annually (so far). The secret of its success: functional independence.

Bright spot

Solar Energy Corporation of India is a different kettle of fish. It was created during the previous government, but Modi’s administration dusted the not-for-profit ‘Section 25 company’ and made it into a ‘Section 3 company’ (in the new Companies Act) which is allowed to engage in commercial activity, such as buying, selling, making profits and distributing dividends. That put SECI on rocket fuel. SECI has actively been floating tenders for solar plants and earlier this year, it also put through the country’s first auction of wind power capacity. In the last two years, SECI has been involved in over 5,000 MW of solar and wind capacity. In 2015-16, it made a post-tax profit of ₹ 20 crore, and paid out a tenth of it as dividend to its shareholder, the Government of India.

The National Skill Development Corporation is 51 per cent owned by industry bodies. Many views have been expressed about its efficacy — there have been high level exits and criticisms about the low hit-rate in placements, but many in the industry believe that the Corporation is still a “work in progress”. Yet certain numbers are revealing. In the three years to 2012-13, it trained six lakh people; in 2013-14 alone, the number was 10 lakh, which rose to 34 lakh in the following year. Till date, NSDC has trained 1.15 crore people in 7,000-odd training centres. The lesson is simple: give people independence and the opportunity to do something for the country, there will be results.

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