Public
Sector Reforms: Solution for Revival
-Dr.
Lalit Kumar Setia*
The public sector banks are suffering with rise in the Non Performing Assets (NPAs) and the Finance Ministry to Government of India reviews the performance of public sector banks to control the NPAs on annual basis. In 2019, the Finance Minister Nirmala Sitharaman directed for the detailed study of NPAs and provided a detailed questionnaire seeking responses from the public sector banks on the reasons for the steep rise in NPAs during the years 2015 to 2019. The questionnaire also sought the responses on 'decline in credit flow'. Instead of rise in IIP from 2.8% (2014-15) to 4.6% (2017-18); the credit to manufacturing sector reduced; why it is reduced?
It is a great concern, how Government of India achieve the national priorities like doubling farmers income, Jal Shakti, Housing for All, Ease of Living, Ease of Doing Business etc. without the performance of Public Sector Enterprises including Banks.
Public Sector Reforms:
The Public Sector Reforms are planned and implemented to improve the performance of organizations serving citizens directly or indirectly. India being a mixed economy and one of the country with largest population; is facing challenges in overcoming corruption or mal-practices in governance. In 1956, the Industrial Policy Resolution (IPR) identified the areas of strategic importance particularly in public sector undertakings. The core services to citizens are required to be delivered with maximum dedication and without any corrupt practice. In 1960s and 1970s, the public enterprises improved and attracted private investments wherever possible. The public enterprises grew dominantly both in terms of capital as well as number of organizations at central and state levels.Assessment of Performance of enterprises:
In 1993, there were 237
central public enterprises with investment of Rs. 1,47,000 crores. At that
time, after assessing the performance of enterprises, it was found that there
were various shortcomings in the public enterprises like :
(i) Insufficient growth in productivity, (ii) Poor project management, (iii) Inadequate attention to research & development, (iv) Low rate of return on investment, and (v) Lack of innovation
Shortcomings in Enterprises:
Most of the organizations
had been seen as white elephants due to such shortcomings. The organizations
seemed as burden rather than an asset and even one third organizations
identified as sick units (the organizations delivering lowest performance year
after year). A large number of organizations had been working with functions of
non-strategic and non-core areas. The areas of services had been changed as per
the requirements of citizens. The Industrial policy 1991 introduced to reform
the public sector organizations with emphasis upon growth and dynamic use of
technology. The Industrial Policy 1991 set the future priorities for public
enterprises such as
(i) Essential infrastructural goods & services, (ii) Exploration and exploitation of oil & minerals, (iii) Manufacture of goods of strategic importance, and (iv) Development of technology and manufacturing capabilities in crucial areas for long term economic development.
Sick Units:
The sick units had been
referred to Board for industrial & financial reconstruction (BIFR) for
their revival. The organizations had been confined to be more strategic, high-tech,
and largely perfect in required essential infrastructure. However, the workers
or employees of sick units had been protected by making their postings either
in healthy organizations or by incorporating similar organizations from fresh
level. In 1992, a non-statutory National Renewal Fund (NRF) had been
established to provide assistance covering cost of retraining and redeployment
of labour. The affected employees had been provided compensation for the loss
happened due to the closure of nonviable or sick public sector units.
In order to improve the
performance, after every 5 to 10 years, there is always requirement to
introduce public sector reforms to cope up with the changes happening in
business environment. The need of improving performance and giving autonomy to
public sector enterprises leads to introduction of public sector reforms. The
accountability and responsibility of employees increased with the pace of
growth. The use of memorandum of understanding (MOU) for improving the
performance also worked in granting greater autonomy to the organizations.
The healthy public sector
organizations used issue of bonds to meet their financial requirements. With
mobilising extra budgetary resources, the organizations become effective in
meeting their financial requirements. However, the bonds for raising capital
had been governed with guidelines issued by the Government. The public sector
reforms are aimed to improve the financial performance and improve rate of
return. In 1990s and during the years 2001 to 2010; the over staffing of
employees is curbed without providing more employment in the organizations. The
officers had been provided charges of two or more organizations without
recruitment of new officers. Even the government started to provide Voluntary
Retirements by launching schemes known as VRS. The data states that in 1990-91,
there were 22.19 lakh employees in PSUs and the number reduced to 20.41 lakh
due to VRS. This also effects the profitability of organizations positively.
The overall net profit earned by Central Public Sector Entreprises increased
significantly due to less payments of salaries to employees.
After 2010, with the
replacement of planning commission with NITI Ayog, the whole economic
environment had been changed. There is greater emphasis on use of technological
means in providing services to the citizens. The Right to Information (RTI) act
and Citizen Charter with introduction of Grievance Redressal Mechanisms; had
become tools of further reforms in public sector organizations. The use of
web-sites, applets, and space technology has changed the whole scenario. The
NITI Ayog is making public sector organization self-reliance with getting their
resources earned from the user charges being charged directly or indirectly
from public. The use of Pubic Private Partnerships (PPPs) in infrastructure
made the resources arranged directly from the beneficiaries. The economic
inequalities are targeted with the help of Direct Benefit Transfer (DBT)
initiatives.
Need of Critical Study of Government Organizations:
*Copyright
© 2017 Dr. Lalit Kumar.
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