The Telegraph
Since 1st March, 1999
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In this era of globalization, public sector units are viewed as impediments to national growth. And the PSUs are believed to be in their present state of decay because of the necessity of maintaining a large workforce — a belief that is sought to be supported by the many stories of companies which have been revived through retrenchments and retirements. No wonder the government is now encouraging entrepreneurs and multinational companies to hire and fire workers at will.

Politicians never tire of reminding us that the fruits of democracy have percolated down to the villages. They contrast this with the situation in Pakistan, where military coups are common. But what they never say is that Pakistan, with its rubber stamp prime ministers and military rulers, too has much the same policy for its PSUs as India.

In setting up the PSUs, the founding fathers of the country aimed to extend the benefits of the industrial revolution to far-flung places. Take Bangalore. Private entrepreneurs are given the lion’s share of credit for the city now being home to India’s information technology industry. But people forget that the seeds were laid by heavy investments by the Centre in high-tech PSUs like Bharat Electronics Limited, Indian Telephone Industries, Indian Space Research Organization and Defence Research and Development Organization. The effects of these units and their ancillaries, together with political stability, led to Bangalore’s rise. It is a different matter that except for BEL, the other PSUs are not doing well.

Iron hand

The chief of a PSU is appointed by the government, and runs the unit as he wishes. His continuing in office is also at the government’s pleasure; the workers have no say. Thus a lot depends on the vision and capability of the chief.

Media reports tend to give the entire credit for the success of PSUs like Indian Oil Corporation Limited and Oil and Natural Gas Corporation Limited to the leadership qualities of their chief executives, without once saying that the real reasons might be government policies and demand mechanics. Management gurus too highlight the importance of discipline and unquestioning obedience for companies to achieve growth. But few people ask why a once healthy and technologically-sound PSU like the Punjab Wireless Systems Limited went bust.

Industry organizations like the Confederation of Indian Industry emphasize the importance of forums like quality circles for a smooth production process. Quality circles help improve industrial relations by allowing the most lowly labourer to present his case before the top management, bypassing “proper channels”. While the former is elated by his access to the top management, the latter also finds that direct audience with workers helps check labour militancy.

For the people

The only way to sustain a PSU is to run them democratically and transparently. But since socialism became unfashionable in the Nineties, the ruling elite has discovered the vices of continuing with the PSUs. They argue that a government’s job is not to run industries. Thus, instead of democratizing them, the trend is to concentrate more power in the higher management in the name of autonomy. But in the absence of democracy, the staff is afraid to criticize wrong policies and take risks to meet a challenge. The result — the PSUs are unable to meet the changing reality.

On one hand, they must follow government rules without bothering about the costs and staff morale. On the other, they must compete with the private sector which can change in response to changes in the business scenario. In the process, the competitiveness of the PSUs is compromised. And in the long run, the PSU’s lack of competitiveness only hampers the interests of the citizens since the PSUs — by providing employment to large sections of the educated middle class — ensure social stability and decent living standards for them.

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