Public Sector Undertakings were promoted by the central and state governments in order to ensure balanced economic and industrial growth. PSUs have been able to achieve many objectives for which, they were promoted. But many years later, they were subjected to scrutiny by the State. It was found that they were not able to achieve all of their objectives. Some of the objectives achieved by them included stable progress of industries, development of the core sector, job security for the employees, development of backward areas and people and contributions towards the national exchequer. Some of the limitations of the PSUs were lack of empathy towards customers, red tape, bureaucratic procedures, massive expenditures on futile overheads and excessive recruitment of those who did not deserve cushy jobs. As a result, the performance parameters of these firms started showing red figures within thirty years of their formation.
Successful PSUs like BHEL, NHPC, MTNL, VSNL and BHPV have done Indians proud. But PSUs like NTC, Air India, UCO Bank and others continue to incur losses. The government, forced by the national and international economic compulsions decided to do away with the sick units. The mores for sell-offs and disinvestment’s came during the early eighties but not with full vigour. During the nineties, however, disinvestment policies procedures were defined in the wake of the advent of free market culture that was making deep in roads into the Indian economic system. Even the nine Navratnas were also exposed to scrutiny and some of them were proposed to be disposed of. The final decision has not been taken as yet.
Former Disinvestment minister Mr. Arun Shourie gave a new impetus to disinvestments in the public sector. The NDA-led government contended that this more would reduce the burden on our financial resources. The writing on the wall is now clear—sick and loss—making PSUs would be sold and only profit-making PSUs would be remain with the central or state governments. Further, Joint Ventures would be promoted with the participation of public sector firms and the corporate sector. Foreign companies are already being allowed to operate in core sectors like steel, power and other vital areas of Indian economy.
The inefficiency, red tape and bureaucratic dirt could not have been removed by any other measure. The policy of privatisation and disinvestment’s with respect to the PSUs is, therefore, justified. Indian economy would get a big boost as it would get rid of all the “White elephants”, which have chained it for fifty years.
If NTC were sold off, its employees would have to be laid off by the State. They should be given adequate compensation so that they are able to start their new careers if they are not absorbed by the private firms, which might take over NTC in the times to come.
In the wake of the arrival of a free market culture in India, all the PSUs are likely to face the axe of privatization. The government would like to retain the profit making units but the terms for retaining those would be very stringent. It has been alleged that PSUs do not utilize financial and manpower resources allocated to them; this fact seems to be true for profit making PSUs as well. Critics of PSUs have been making these allegations since the early seventies. In such a case, PSUs could be converted into “Joint Ventures,” which would essentially incorporate the funds and management of private sector enterprises. In India, however, successful joint ventures could be counted on finger tips. Moreover, private firms would like to be independent and sans and State control. Therefore, the only alternatives left for the government are two-either sell off the PSU or the stake of the national exchequer in the same by asking the common masses to invest in its operation. Some joint ventures could succeed but the chances of their survival are not very bright.
The government plans to restructure and revive potentially viable PSUs. It would close those, which cannot be revived. It is likely to bring down equities in all non-strategic PSUs to 26 per cent or lower. Financial restructuring of 20 PSUs has already been approved by the government. A comprehensive package for restructuring SAIL has been approved. Sick units are likely to be closed forever. PSU disinvestment was supposed to garner Rs. 10,000 crore but the same could not be achieved. However, these measures would be able to put the economy on the right track as the white elephants would not be able to suck up precious financial resources of the nation. In our view, the moves for privatisation, restructuring and disinvestment’s in the PSUs would make us self-reliant within a decade. These steps were inevitable. But the process of disinvestment’s has not yielded coveted results so far. The government has to implement disinvestment procedure by taking care of the employees, customers and financial supporters of the PSU in question.
Despite herculean efforts by many PSUs, the infrastructure of Indian economy has not been fully developed. Rural areas, electrical energy, coal, mines and queries, transportation and fertilizers are those areas in which, PSUs ought to contribute a lot. Defence, nuclear energy, ocean development and non-conventional energy sources are some other areas in which, private sector firms have not decided to operate. So, PSUs are likely to continue operations for at least 50 years to come, precisely because their roles are required in the afore mentioned areas. However, the State must ensure their efficient and scam-free operations during the century.