Without underplaying the valuable role of the public sector in the initial decades after Independence, the time has come to dispassionately look at each of the 250 odd central public sector undertakings (CPSUs) — neigh every government-owned enterprise in India whether centrally or state owned. Such 'zero budgeting' about the continuance or otherwise of PSUs is called for now that we have consciously moved to letting in private players in almost every segment and permitted market forces to decide resource-allocation.
The response to the liberalisation and globalisation initiated in 1991-92 and the subsequent measures has been immensely positive with noticeable resultant inflow of private capital, entrepreneurship and technology — the very raison d'etre for encouraging and promoting the public sector in the first place. Now that alternative sources of investment have emerged and domestic private management has matured, the role and track record of every government undertaking must be revisited to determine more optimum utilisation of societal resources and ensure that taxpayers' money is deployed where it is most needed and productive.
To start with, the exercise of deciding the fate of PSUs should begin by critically reviewing each of the 65 CPSEs which, as per the Union minister for public enterprises' recent statement in Parliament, were deemed 'sick' at the end of the financial year 2014-15 — theseenterprises had experienced more than 50% erosion in their average net worth during the four preceding years. The number of sick units was 58 in 2013-14 and 61 in 2012-13, reflecting that of late sickness had been increasing. A similar trend has been noticed in the loss-making entities — all losing firms are not termed sick till such time as their net worth erosion goes above the threshold limit.
09/08/15 Ajay Dua/Economic Times
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The response to the liberalisation and globalisation initiated in 1991-92 and the subsequent measures has been immensely positive with noticeable resultant inflow of private capital, entrepreneurship and technology — the very raison d'etre for encouraging and promoting the public sector in the first place. Now that alternative sources of investment have emerged and domestic private management has matured, the role and track record of every government undertaking must be revisited to determine more optimum utilisation of societal resources and ensure that taxpayers' money is deployed where it is most needed and productive.
To start with, the exercise of deciding the fate of PSUs should begin by critically reviewing each of the 65 CPSEs which, as per the Union minister for public enterprises' recent statement in Parliament, were deemed 'sick' at the end of the financial year 2014-15 — theseenterprises had experienced more than 50% erosion in their average net worth during the four preceding years. The number of sick units was 58 in 2013-14 and 61 in 2012-13, reflecting that of late sickness had been increasing. A similar trend has been noticed in the loss-making entities — all losing firms are not termed sick till such time as their net worth erosion goes above the threshold limit.
09/08/15 Ajay Dua/Economic Times
