Headless PSUs, Bottomless Pits; Whose Money Is It Anyway!
Imagine an industrial house losing Rs 75 crore a day or bleeding `3 crore every hour. Imagine an industrial corporate group where one of four companies—or 63 of 225 operational companies—is a loss-maker. Imagine an industrial house where just 10 companies account for 90 per cent of the losses. Imagine a group where 43 companies are losing money every year for the past three years. Imagine a group which has lost `65,649 crore in the past three years.
Imagine a group which is not affected by the fact that 32 of its companies are headless. Imagine a group where it takes between six months and two years for it to find a chief to run the company. Imagine a group where businesses with a turnover of over `75,000 crore are being run on an ad-hoc basis. Imagine a group where 15 persons have been shortlisted but cannot be appointed for want of clearances.
Imagine you are the owner. Because the group we are taking is the Government of India, the largest industrial house in the country. Last week, as the Congress and BJP discussed and debated the law to curb the sins of commission, the government tabled two statements on the sins of omission—about headless PSUs and bottomless losses.
Consider the magnitude of decay. Just in one segment—heavy industry—17 of the 32 Central public sector units have wiped out their net worth. The horror story of PSUs of course is in flashback, dated for the financial year 2011-12—the government is yet waiting for 2012-13 financials. In a country where every second subscribers are logging on to mobile networks, in a country where connectivity is yet an opportunity, MTNL and BSNL have between them notched losses of `26,580 crore in the last three years. These are no ordinary public sector units. MTNL is on the Navaratna list and BSNL is on the Miniratna list. And they are by no means the only “ratnas” on the list of lossmaking units. There is Shipping Corporation of India, the undeclared “ratna” called Air India which accounted for 27 per cent of PSU losses for the year 2011-12 and many other members of the 70 ratnas listed by the department of public enterprises.
The issue is not just about losses. Losses are not unknown or unusual in India’s public sector, given the socialist mythology of not-for-profit or not-only-for-profit mantra that they chant. The question is: Is the government true to the covenant of nurturing PSUs? Take drug-maker IDPL. It was declared sick in August 1992 and sent to BIFR (Board for Industrial and Financial Reconstruction). In 2013, it transpires that IDPL has received no package yet—not in the Xth plan, not in the XIth plan nor in the XIIth plan. And IDPL is not the only sick unit trapped in this black hole between life and death.
Nothing illustrates the sloth in the system more effectively than the lackadaisical manner in which PSUs are left headless for months and even years. Currently, 32 units—including blue chips like National Mineral Development Corporation, Power Finance Corporation and the recently bloodied Shipping Corporation of India—are headless. Of the 32 headless units, three are listed as Navratnas and nine are listed as Miniratnas. It doesn’t seem to bother anybody in the system that there is both public interest and public monies involved.
For the record, the top post must be advertised a year in advance, the selection process complete six months in advance and the appointment made before the incumbent leaves. In practice red-tape rules! The job description is finalised by the administrative ministry, the candidates for CMD/MD are selected by the Public Enterprises Selection Boards (PESB) and the selection vetted by CVC and the Appointments Committee of Cabinet. In 15 of the 32 vacancies, recommendations by the PESB are pending clearances from the department of personnel. It is a classic display of the “everyone is responsible but nobody will be accountable” maxim of politics.
There is a clear argument against government being in business, but every regime comes up with a new angularity to justify the existence of PSUs—political parties make it about jobs, about inclusion and about pricing, cartelisation and monopolies when even though mostly about vote banks and about the umbrella of pelf. Fact is, companies—be it Maruti or Balco—do better once freed from the clutches of politicians and add revenues, jobs and growth to the economy. But given the outrage over crony capitalism, even selective privatisation as an argument will have to wait for a calmer moment.
Assuming that Public Sector Units cannot be wished away, voters in 2014 need to ask the question: Does government-owned necessarily mean government-managed? Why not transfer government ownership back to the public—to something like the National Shareholding Trust suggested by G V Ramakrishna in the Nineties? The PSUs would be out of ministerial stranglehold, run by professional managers and the trust could be brought under Parliamentary oversight. The holdings of the trust itself could be offered on an exchange traded fund as units to citizens.
The question then to be asked is: Are politicians against win-win ideas?
Shankkar Aiyar is the author of Accidental India: A History of the Nation’s Passage through Crisis and Change