PSU traction

The series run by this newspaper, 8216;Public Sector Unbound8217;, should come as an eye-opener for all those who have been viscerally opposed to disinvestment. The impressive performance of once-ailing companies like BALCO and VSNL, the turnaround story of Lagan Jute Machinery Company Limited 8212; now Lagan Engineering Company Limited 8212; are just a few of the success stories that merit attention. The fortunes of the last 8212; a perennially loss-incurring venture 8212; were revived after management control was transferred to a Kolkata-based private player, Murlidhar Ratanlal Exports Limited. Central PSUs privatised by the NDA are now showing how better management and incentives help in turning companies around. What8217;s more, privatisation has brought benefits to both the workers and to the economy, by raising the productivity of the resources that were earlier locked away.

While the National Common Minimum Programme has set down that profit-making enterprises will not be privatised, the UPA could have at least privatised the chronic loss-makers among public sector enterprises. Not only does the government have to pay out money, year after year, to cover their losses of more than Rs 7,000 crore, there are huge resources 8212; such as land, labour and capital 8212; tied up in each of them. If these could be utilised, there would be an increase in total production and additional income coming into the economy. Of around 240 central PSUs, 90 are chronically loss-making. They have accumulated losses for many years now and continue to do so to the extent that their net worth is now in the negative. Most of them have seen many efforts to turn them around but to little avail.

The success stories that the series highlights should prompt the UPA government to do a rethink 8212; even if it comes rather late in its tenure. Blackmailed by the Left, it has today almost completely given up on privatisation initiatives. Governments should be focusing on public goods, such as law and order, and their more efficient delivery, rather than run industrial units making jute or fertilisers. Such a shift in track will result in improving governance, along with better health and education delivery and improved infrastructure. The UPA must let the private sector run the factories, given that it can do this job more efficiently and effectively. And when loss-makers turn into profitable concerns, it is the government and the country that stand to gain.