From rumours of BSNL nearing closure to Air India’s indebtedness, and closer to home, the abysmal performance of Kadamba, government enterprises have been incurring heavy losses, and the reason for this happening is more than just corruption, say commentators
JAY JOSHI
A look at some recent news reports show that a number of government-run enterprises are failing, or running at a loss. While the central government-run telecommunications firm BSNL is said to be nearing closure, employees from aeronautics major Hindustan Aeronautics Limited (HAL) are now on strike, citing issues over revision of wages. Closer at home in Goa, a number of state-run ventures such as Kadamba Transport Corporation are incurring heavy losses. The question, why do government enterprises always run at a loss, is often asked, and the answer that is generally given is corruption. However, there are some other factors involved here too, say economists.
“The public sector enterprises in the nation have largely failed on account of excessive and rampant interference in their working from the political class,” says Deepak Laad, former banker from Porvorim. “It is no secret that nepotism and favoritism play major role in appointment and promotions of top honchos of the PSUs. And then the same culture percolates down. Obviously the lack of leadership, efficiency, competence and capability leads to the mismanagement of these units and at times breeds corruption too. Most of these Units end up as loss-making. Yet, again the nearness to politicians shield these guilty industry heads from facing accountability and punitive actions. Next, the government fully or partly resorts to disinvestment, with the grand intention of stabilizing or improving efficiency in these ravaged enterprises in the name of bringing in competitiveness, discipline ( which is diluted in PSU due to excessive trade unionism) aimed at improving their productivity. Disinvestments also help the government raise capital, when the tax revenues are depleting,” says Laad.
Even so, government enterprises tend to defend themselves stating that their primary goal is not profit, but service for the citizens. However, this excuse cannot justify the bad performance of PSU across all sectors. Rather, it is only acceptable for certain undertakings.
“The government has different kinds of undertakings. There are utility undertakings -which provide the citizens basic utilities such as water and power. Then, there are promotional undertakings which promote development, and the third catagory is commercial undertakings,” says Margao-based political commentator Prabhakar Timble. “Out of these, one can understand if utility undertaking are running at a loss, because the private sector is generally reluctant to enter utility sector. However, there is no reason why development undertakings or commercial undertakings where the government actually competes with the private sector should incur losses,” TImble opines. He further notes that most PSUs tend to have large overheads, and lack business-mindedness.
While the debate is still on about why most PSUs tend to incur losses, on the other side, the government has proposed to privatise profit-making enterprises such as Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited. This is done as a way to dress up the budget deficits, states TImble.
Additionally, the government loses revenue when it reduces taxes and gives incentives to businesses, and might resort to disinvestment to make up for the lost revenue, experts stated. In the present times, it is general consensus that India is feeling the heat of an economic slowdown. How it reflects on the fate of the PSUs now remains to be seen.
