PRIVATISATION OF PUBLIC SECTOR UNITS
Come on, lets find opinion. Should we go for Privatization of Public sector units in a big way?
Some of the Logics which goes For Privatisation are:
Improved Efficiency
Improved Financial soundness
Improved Accountability
Improved Meritocracy
Fast decisions, No government interference,
Profit to government, govt to use the profits and concentrate on activities it is most suitable or for which it is in existence.
Stock market benefits, better price realization, better dividend to govt and public invested.
Cost cutting in number of persons employed
Improved Customer interaction and loyalty
Quality of Employment
Equally strong Some of the Logics which goes Against Privatisation are:
Precious assets- Land, buiding, capital, people, machineries, disposed-off at throw-away prices. Take the case of privatization of Airport Centaur Hotel, Mumbai by BJP govt. It was sold to a party Batra Hospitality at a throw-away price of Rs 83 crores and later on Batra Hospitality sold it to Sahara Group at a disclosed price of 115 crores in a few months.
Nature of business will change. A viable business is viable business for anyone, whether it is government or private businessmen. If a business can and has potential to generate profits, government can also run it, just good administration is required with farsightedness. Take the case of turnaround of Indian railways. If a businessman knowingly buys a government loss making business, be sure that he will also not run that business. He will either use the property or change the business or do his banking. Don’t be under any false optimism. If government cannot run Air India profitably, so does other airlines in the country, name any airline which is running at a profit. The only low cost carrier airline Indigo seems to be profitable (people in India are very cost conscious, we have been groomed from the beginning to cut costs and save for future) and its model is being looked into by other airlines also and even air India is trying the model, but facing hurdles with unions.
Meritocracy- You cant bet, we are Indian, vested interests are present everywhere.
Corruption - Cannot surely say. No one is immune to it. We talk big every time we get an opportunity to speak on any public platform that Politicians, Babus, Police, Judiciary, even fifth estate, media , are corrupt, but give one a chance and ensure that this deal will not be revealed to anyone, he will not let the opportunity go!
Financial soundness - Even government can do it. After all it has all the banks and resources of the world are at its disposal. In fact Government can mobilize resources at minimum costs and guarantees as it does for infrastructure projects.
Accountability- With rising public interests and tools like RTI and efforts like e-governance and computerization of land records or individual efforts like communicating with Maharashtra Chief Ministers by MLAs only by email, etc, this can be achieved by government also. And on top of it we have PAC, CAG, CVC as watchdog bodies.
Efficiency - Even govt can do it. With little interference fast decisions could be taken. Meritocracy - Do we know that govt has some of the best brains in the country. That they are not able to use it is different matter.
Employment: Public sector employees are not in constant tension that their job is unsafe so they can concentrate on work always looking at long term perspective and benefits. Contrast it with a private employee where there is so much target on his head that for fulfilling the target he goes to any level to see that the work is done at the moment, leave alone the long term implications that some of such decisions might be.
Customer Loyalty: Its better not said. Do you know that people or even companies prefer to bank on government banks as they know that their money is safe, minimum charges are applied, etc. Yes, they do have trouble in standing in queues and getting their money little late but it is more than compensated when the Branch Manager gives a patient hearing to his problems and solves them in minutes and is always available on one phone call. Do you have such personalized service available with a private bank. Is it not customer loyalty or customer satisfaction?
Stock market benefits: Rise in stock market just raises the notional value of the stock, not necessarily the valuation of the company. The valuation is done by strength of balance sheets and not by stock market rise, which is the result of many factors like speculation, lobbies, rumours, news, etc. And balance sheet? Its in the hands of CAs. They can make any projection and manipulate any balance sheet as per the convenience of promoters. Its, better not said.
In fact in case of Public sector, the decisions are taken consciously as the money involved is public money and the public can raise questions even later also through any forum. In corporates huge sums of money can be conveniently shown to be written-off in many ways if the promoters agree and shareholders permission is granted. No such luxury is available in dealing with public money in a Public Sector concern.
Social and emotional costs
This intense chapter should be factored in before taking any privatization decision. There is a question of rehabilitation of a large number of people who are past their prime in terms of getting employment in some other companies as they have been conditioned for a particular type of job and all of a sudden whosoever has not updated his knowledge or diversified his skills or developed alternate source of employment/income, their families are in trouble. No amount of Pensions, or VRS or Gratuity can understand or minimize the pain and insecurity and crisis they undergo in midlife of the career. There is a danger of increase in number of unemployed or unemployable in already overburdened problem of this country and has potential cause of many unrest and class and social struggle.
Conclusion
Its very easy to go for privatization but very difficult to roll back or undo the damage done in entire financial, administrative and social fabric of the company (and it includes the ancillaries and other suppliers shops developed in and around the premises of the company) and that also just for the sake of some additional money to be made available for the government to spend in developmental works! This is much less than what we are not able to use it or waste it or used in unprofitable way. The money which in any way lies unused by the elected representatives every year which is allotted to them to spend for their constituency or by the state governments who themselves who return every year the money allotted to them by the Union Budget every year which they are not able to use it in any developmental works due to lack of available avenues for the betterment of the state or the amount of money which is lost due to corruption in the system (as high as 85% money never reaches the people and only the rest 15% goes to genuine public) .
The choice is before us to decide. Perhaps Divestments may be a better options and we will talk about its for and against some other day.
Come on, lets find opinion. Should we go for Privatization of Public sector units in a big way?
Some of the Logics which goes For Privatisation are:
Improved Efficiency
Improved Financial soundness
Improved Accountability
Improved Meritocracy
Fast decisions, No government interference,
Profit to government, govt to use the profits and concentrate on activities it is most suitable or for which it is in existence.
Stock market benefits, better price realization, better dividend to govt and public invested.
Cost cutting in number of persons employed
Improved Customer interaction and loyalty
Quality of Employment
Equally strong Some of the Logics which goes Against Privatisation are:
Precious assets- Land, buiding, capital, people, machineries, disposed-off at throw-away prices. Take the case of privatization of Airport Centaur Hotel, Mumbai by BJP govt. It was sold to a party Batra Hospitality at a throw-away price of Rs 83 crores and later on Batra Hospitality sold it to Sahara Group at a disclosed price of 115 crores in a few months.
Nature of business will change. A viable business is viable business for anyone, whether it is government or private businessmen. If a business can and has potential to generate profits, government can also run it, just good administration is required with farsightedness. Take the case of turnaround of Indian railways. If a businessman knowingly buys a government loss making business, be sure that he will also not run that business. He will either use the property or change the business or do his banking. Don’t be under any false optimism. If government cannot run Air India profitably, so does other airlines in the country, name any airline which is running at a profit. The only low cost carrier airline Indigo seems to be profitable (people in India are very cost conscious, we have been groomed from the beginning to cut costs and save for future) and its model is being looked into by other airlines also and even air India is trying the model, but facing hurdles with unions.
Meritocracy- You cant bet, we are Indian, vested interests are present everywhere.
Corruption - Cannot surely say. No one is immune to it. We talk big every time we get an opportunity to speak on any public platform that Politicians, Babus, Police, Judiciary, even fifth estate, media , are corrupt, but give one a chance and ensure that this deal will not be revealed to anyone, he will not let the opportunity go!
Financial soundness - Even government can do it. After all it has all the banks and resources of the world are at its disposal. In fact Government can mobilize resources at minimum costs and guarantees as it does for infrastructure projects.
Accountability- With rising public interests and tools like RTI and efforts like e-governance and computerization of land records or individual efforts like communicating with Maharashtra Chief Ministers by MLAs only by email, etc, this can be achieved by government also. And on top of it we have PAC, CAG, CVC as watchdog bodies.
Efficiency - Even govt can do it. With little interference fast decisions could be taken. Meritocracy - Do we know that govt has some of the best brains in the country. That they are not able to use it is different matter.
Employment: Public sector employees are not in constant tension that their job is unsafe so they can concentrate on work always looking at long term perspective and benefits. Contrast it with a private employee where there is so much target on his head that for fulfilling the target he goes to any level to see that the work is done at the moment, leave alone the long term implications that some of such decisions might be.
Customer Loyalty: Its better not said. Do you know that people or even companies prefer to bank on government banks as they know that their money is safe, minimum charges are applied, etc. Yes, they do have trouble in standing in queues and getting their money little late but it is more than compensated when the Branch Manager gives a patient hearing to his problems and solves them in minutes and is always available on one phone call. Do you have such personalized service available with a private bank. Is it not customer loyalty or customer satisfaction?
Stock market benefits: Rise in stock market just raises the notional value of the stock, not necessarily the valuation of the company. The valuation is done by strength of balance sheets and not by stock market rise, which is the result of many factors like speculation, lobbies, rumours, news, etc. And balance sheet? Its in the hands of CAs. They can make any projection and manipulate any balance sheet as per the convenience of promoters. Its, better not said.
In fact in case of Public sector, the decisions are taken consciously as the money involved is public money and the public can raise questions even later also through any forum. In corporates huge sums of money can be conveniently shown to be written-off in many ways if the promoters agree and shareholders permission is granted. No such luxury is available in dealing with public money in a Public Sector concern.
Social and emotional costs
This intense chapter should be factored in before taking any privatization decision. There is a question of rehabilitation of a large number of people who are past their prime in terms of getting employment in some other companies as they have been conditioned for a particular type of job and all of a sudden whosoever has not updated his knowledge or diversified his skills or developed alternate source of employment/income, their families are in trouble. No amount of Pensions, or VRS or Gratuity can understand or minimize the pain and insecurity and crisis they undergo in midlife of the career. There is a danger of increase in number of unemployed or unemployable in already overburdened problem of this country and has potential cause of many unrest and class and social struggle.
Conclusion
Its very easy to go for privatization but very difficult to roll back or undo the damage done in entire financial, administrative and social fabric of the company (and it includes the ancillaries and other suppliers shops developed in and around the premises of the company) and that also just for the sake of some additional money to be made available for the government to spend in developmental works! This is much less than what we are not able to use it or waste it or used in unprofitable way. The money which in any way lies unused by the elected representatives every year which is allotted to them to spend for their constituency or by the state governments who themselves who return every year the money allotted to them by the Union Budget every year which they are not able to use it in any developmental works due to lack of available avenues for the betterment of the state or the amount of money which is lost due to corruption in the system (as high as 85% money never reaches the people and only the rest 15% goes to genuine public) .
The choice is before us to decide. Perhaps Divestments may be a better options and we will talk about its for and against some other day.
No comments:
Post a Comment