Public Sector’s White Elephants or Country’s Prime Possessions
Posted : August 23, 2005 at 6:09 am [IST]
Do you know which is the largest industrial house of India? What is its share of total market caps? It is ‘the government of India’ with 227 PSUs.The listed PSUs account for Rs. 4,620,000 million- a fourth of the total market cap of Rs.17, 823,860 million.
An India today-Crisil survey based on the earliest data available for 2002-3 (for 186 out of the total of 227) is revealing, and must be to known to every citizen of the country.
73 enterprises account for a total of Rs. 4,81,990 million of the erosion of net worth. The amount is four times what the government of India budgets for primary education.
The total loss of the 89 enterprises is Rs. 98,810 million, which is more than what has been budgeted for healthcare. And interestingly, just the accumulated loss of the worst five PSUs totals up to Rs. 3,09,660 million or six times what has been allocated for drinking water supply.
And so far employment is concerned, central PSUs account for only 6 million of the 27 million jobs in organized sector and a small fraction of the total workforce of over 400 million people in India.
As per the economic survey of 2004, the average annual emoluments of a public-sector employee are Rs. 2,24,000.On an equity of Rs. 24, 61, 060 million, the government earned a dividend of Rs 1,29,070 million in 2002-3, or roughly 5.25%. The government thus earns less per year on its investment than it pays for its borrowings. And which are the major enterprises contributing to this dividend booty? More than two-thirds of the market caps come from the energy companies and the companies in energy sector also contributed Rs. 1,18,360 million of dividend. If the energy companies are left out, the total dividend earned comes down to Rs. 10, 710 million only. The energy companies are performing well because of an extraordinary situation in global energy market, and monopolistic conditions. It may not last forever.
And every year, the government is to make a huge allocation to keep the sick and loss making units alive and to pay the dues of the employees. In 2004, the allocation was Rs. 5,170 million, and in 2005 again, it was Rs. 1,40,400 million in addition to loans worth Rs. 35,540 milion.
Those who are running the government know this huge drain on exchequer. After all who can understand it better than the legendary MMC (Manmohan, Montek, Chidambaram)? But unfortunately, political pressures from left have made them ineffective and it is pity that that left can’t understand the damage it is causing to the growth of the nation, as it doesn’t want to understand. One of the good works done by the last government, particularly by its missionary minister was the disinvestment of some of the public sector enterprises. Surprisingly, the present government soon after its installation because of the leftist pressure wound up that ministry as the first economic reform. Even MMC understands that there can’t be any alternative to disinvestments, and this is what many experts’ reports have suggested over a decade and a half, but they can’t do anything. Recently, Chidambaram has declared that there are shelving the idea of disinvestments of even non-strategic enterprises. And this was one news-item from India that was covered in The New York Times.
What can be done under these circumstances in the national interest, when the de facto leftists that are regulating the reform priorities are not ready to learn any lesson from their own comrades in China? They close their eyes when they are requested to see to the companies that have been divested and their changed performances that are making the country wealthier and the employees satisfied and prosperous. One such glaring example is Jessops in Calcutta. The answers may be in granting autonomy to these enterprises and restructure the management to make it totally professional and accountable. Many a steps can be taken in that direction. Some of these companies can still be revitalized, if a right man is selected to head it and if he is given full liberty to make them profitable. Some even can become the largest companies of the world in its area of operation. And there is plenty to learn from China’s way of transformation of its state units.
MMC will have to be innovative to find way out to push the reforms with the leftists in their team or use the best of their negotiating and teaching skills to bring them on their side.
PS
If you want to know more about these PSUs, please follow this site from the President of India.
- Indra
Category: Government Policy/Administration |
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