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Vajpayee bemoans PSUs' decay, Manohar Joshi highlights their nation-building potential

Prime Minister Atal Bihari Vajpayee today defended the government's divestment policy. He said the capability of the public sector would be strengthened through greater managerial autonomy and technological upgradation, enabling it to meet the new challenges of globalisation and increased competition.

Referring to the criticism of the divestment policy, he said, ''Ours is a well-thought-out strategy to revitalise the public sector by bringing in competition, granting greater operational flexibility, reducing surplus manpower and upgrading technology.''

Vajpayee made these remarks while addressing the conference of the chief executives of public sector enterprises in New Delhi.

Making it clear that the government was not indulging in 'distress sale', the prime minister urged all, especially workers, to dispel unfounded fears about the effects of divestment. He said the government was fully aware of the legitimate and reasonable interests of employees and was committed to protect them.

Taking a hard look at the public sector, Vajpayee said intervention of political parties in power was a major factor in the decline of public sector units. The parties have used these units as fast breeders of jobs, instead of making them sustainable, competitive and fruitful players in the national economy. ''Political expediency of the moment was allowed to prevail over the future viability of public sector units and the employment security of their employees,'' he said.

Vajpayee gave away awards for excellence in performance for 1998-99 to ten PSUs.

He said the monopoly environment enforced by previous governments in the guise of helping public sector units actually had a debilitating impact on them. Cumbersome procedures that formed the backbone of the pre-liberalisation licence-permit-quota raj helped only to worsen matters, he said.

Although the public sector enterprises played a significant role in the nation-building process, they had begun to falter during the seventies and eighties. According to him, the reasons for this are inadequate competition leading to inefficiencies, inadequate accountability, making them careless about productivity and profit, and, inadequate motivation making them uneager participants in the economy.

There were also systemic reasons, he said, pointing out that it was impossible to separate a public sector from government.

Moreover, public sector enterprise managements were constantly under pressure to conform to guidelines and rules, many of which were entirely irrelevent and dampen initiative and enthusiasm, he said.

Certain brand of trade union politics whose success depended on crippling strikes, also had a long-term effect in the form of declining productivity and falling profits, he said.

The world over, privatisation has led to increased efficiency and higher profits, he recalled. After more than a decade of economic reforms, India has become economically much stronger than it was at the time of independence, he said.

The prime minister appealed to the chief executives to arrest the worrisome trends and ensure purposeful functioning as well as higher profitability of their respetive enterprises.

Manohar Joshi, minister for heavy industry and public enterprises, did some plain speaking. He narrated the achievements of the public sector, including building blocks in the efforts to become economically self-reliant and providing employment on a large scale, and asked: ''How far would it be correct to hold the PSUs responsible for the country's economic ills?.''

He also asked whether it was not incorrect to say that the public sector has been the prime mover of the economic development of the country. ''Would it not be correct to say that the public sector has been a guarantor of social security?'' he asked.

According to Joshi, there was some conspiracy by some interested parties against the PSUs.

He also made it clear that the public sector was in no way different from the private sector. ''Efficiency is not dependent on ownership.''

He suggested that greater autonomy should be provided to PSUs alongwith responsibility and accountability. ''The path to improving the performance lies in greater authority with responsibility and quicker decisions,'' he said.

Joshi said that funds raised through divestment of a company should be used in the same company for modernisation, improvement of technology and diversification. He also wanted the prime minister to remove the uncertainty and anxiety on divestment.

He said the government had formulated a new voluntary retirement scheme which envisaged that profit-making PSUs should offer as compensation 60 days' salary for every completed year of service. He also announced that the National Renewal Fund was being revamped and vested with the Department of Public Enterprises.

Earlier, Dr Uddesh Kohli, chairman, Standing Conference of Public Enterprises or Scope, said many of the public sector enterprises were not set up for profits but for achieving economic and social objectives.

He suggested that the concept of administrative ministries be dispensed with and all PSUs be brought under one department. While the government could appoint the chief executive of a PSU, the selection of other directors may be left to the board, he said.

He sought greater functional freedom for the PSUs and proposed formation of a high-powered committee to suggest how real autonomy could be given to PSUs.

The prime minister's awards were received by the chief executives of Bharat Petroleum Corporation, Cochin Refineries, HTL Limited, NTPC, Power Finance Corporation, Telecommunication Consultants of India, PEC Limited, Housing and Urban Development Corporation, Hindustan Aeronautics Limited and Power Grid Corporation of India.

The Scope awards for excellence and outstanding contribution to public sector management were given in the individual category to Rajendra Singh, chairman, NTPC and M A Pathan, chairman, Indian Oil Corporation. Special individual category awards were given to Lakshmi G Menon, chairman, HTL and Probir Roy, chairman, Bengal Cchemicals and Pharmaceuticals.

Institutional category awards were presented to BHEL, South Eastern Coalfields, Bharat Dynamics and Northern Coalfields.

UNI

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