Economical Essay
Essay

Reforming The Public Sector



Reforming The Public Sector

          Today privatisation is a world wide phenomenon. The privatisation of PSUs in India has already been accepted as a matter of Government policy. But remember privatisation is not a panacea for the economic ills of the country. Reforms in the public sector undertakings will save our huge infrastructure. The PSUs number no less than 246 as today. We must look into the causes of their failure and rectify them.
          Factors like those of professionalism, obsolete technology and political interference have to be corrected. About 246 Public sector undertakings involve a total investment of Rs 1,13, 234 crore. About 23 lakh employees are working there. In addition there are 1100 state level Public enterprises with an estimated investment of about Rs. 50,000 crore. In the beginning it was estimated that public sector was to contribute to the growth and development of the nation. But this has proved to be an unattainable ideal.
          Instead of talking about the privatisation of the Public sector units it may more useful to talk about reforms. First we must make distinction between commercial units and public utilities units. Hotels, steel and textile mills etc. are und to earn profits. Why should a steel mill or a hotel not earn any profit? Why should government start all this if it cannot manage such units efficiently? If it is so, let government provide good administration to the Country and not take to commercial activities. Then there are units to serve the people such as vitals, education, transport and medicines.
          After independence the government invested in steels mills, heavy engineering and other industries because private sector was not willing to invest in them. After reasonable time these industries should have started showing profits. Instead these units came to survive on subsidies. We should assign new role to selective Public sector enterprises in the frame work of new economic order in the following areas.

          Increased autonomy should be given to these units. Just as we have started with Nav Ratna, other selective companies should be granted autonomous status. Accountability should be made compulsory as is expected of managerial staff in private sector. Obsolete technology should be replaced. Political and official interference should be minimized. Competitive spirit in production, price fixation and marketing should be developed. There should not be import restriction and controls in the wake of recent liberalization.
          In the area of employment drastic changes are needed. Out of total 23 lakh employees 4.5 lakh have been identified surplus most of whom are employed in sick units. To reduce financial losses Government introduced in 1992 Golden hand shake scheme known as Voluntary Retirement Scheme. However, this scheme has not yielded expected results. A new Exit policy with an element of retrenchment has to be used. Exit policy and efforts of rehabilitation are right steps in right direction.
          Obviously, the steps taken so far are half hearted. No concrete steps have yet been taken to improve the technology and efficiency of the Public sector. At the same time privatisation should not be considered a panacea for the ailing Public sector. Reforms are possible. Only political will is needed.
          In fact private sector should also be roped in. Forgetting ideological differences healthy national sector needs to be developed. Public & Private sectors should be complementary. The need of public enterprises in public utilities areas can not be denied. In the areas of transport, Railways, hospitals, medicines, Government should bring about reformation earnestly. Let those undertakings with commercial overtones be privatised lest they should be a drain on Indian fragile economy. Therefore, the ideal solution lies in developing a robust national sector irrespective of making distinction between Private & Public sectors.