In the article, “The rise of the public sector” (June 1), Kanika Datta writes that despite the government trying to disinvest its holdings in the last two decades, many more new public sector undertakings (PSU) have been created. The brief analysis that follows shows the dichotomy at work, and it appears the government has no clearly enunciated policy for ameliorating the malaise in its own stables.
New policies are announced with fanfare, but followed by half-hearted steps to implement them. The result invariably is suboptimal and the problem assumes larger proportions. Consider the frantic efforts at all levels of the government and its various agencies to reduce the non-performing assets of public sector banks. Unless the government radically changes the management of these ailing units and the conditions under which employees work, it will not be able to resolve the crisis at hand.
The government is attempting to serve palliatives and make cosmetic changes where only a purgative in the form of a radical surgery is required. More importantly, the government is trying to solve the poor performance problem in PSUs through administrative fiat. The irony is that bureaucrats and their political masters, both the creators of the problem, are now trying to solve it.
Market-based solutions should be adopted to instil more discipline into these recalcitrant units, especially public sector banks. Most fundraising attempts should be pursued through market borrowings. The government’s support to PSUs should be in the form of facilitation rather than bailouts and haircuts that suit truant businessmen and guilty bankers.
The need of the hour is a clearly spelt-out policy that is followed ruthlessly to rid public sector entities of the malady they have long been afflicted with.
Anand Prakash Dehradun
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