Paralysis on Raisina Hill is reflected in the absence of top executives in state-owned companies
Policy paralysis is a phrase that has come to define the UPA governments mid-term record,and its implications were brought home recently when growth forecasts for 2011-12 were revised to below 7 per cent. With this,expectations that 8-plus per cent GDP growth had become the new normal for the Indian economy have been shattered. What is most unfortunate is that this slowdown does not result only from a tough global economic outlook it is also,in large part,a result of a failure,or refusal,to undertake incremental reform measures and just routine economic and financial decisions. Put simply,UPA 2 is turning a blind eye even to low-hanging fruit take its less than energetic political groundwork to allow FDI in multi-brand retail. And this paralysis on Raisina Hill has crept into the execution of normal decision-making processes on appointments: almost a dozen of this countrys top state-owned companies are without top executives for long stretches. Put together,it undermines confidence in the governments capacity to steer the economy back to a high-growth trajectory.
The three top financial institutions the Life Insurance Corporation,General Insurance Corporation and UTI Mutual Fund have been without a chairperson for almost a year. Also headless are key infrastructure sector firms like Coal India,National Mineral Development Corporation,NHPC Limited and National Highways Authority of India. In all,one of the five Maharatnas and 6 of the 16 Navratnas are without a chief. The heft of public sector undertakings in the Indian economy can be seen from the fact that the 48 listed central PSUs account for a fifth of the market cap of the Bombay Stock Exchange. Together,the 248 Central PSUs account for cash reserves of more than Rs 2,50,000 crore,according to 2010-11 audited reports. The drift in decision-making is evident from the sharp decline in their success in raising funds from the capital markets this financial year.
Reasons reported for the delay in making appointments include disagreements over candidates and non-receipt of vigilance reports. Yet,whether it be dithering or attempts at favouritism in carrying through these high appointments,the message emanating is a lack of seriousness in governance of this countrys financial and infrastructure companies. Reversing this is crucial to reviving positive sentiment in the Indian economy and attracting investment.