Since independence in 1947 India was a socialist planned economy for about five decades. The economic liberalisation of the early 1990s, brought about some kind of qualitative change in the Indian development scenario. The state owned firms were in every sphere like hotels, tea, textiles, coal, etc numbering some 244 at the central government level and may be 1000 state government, owned PSUs in the 29 states. It is said that nearly 20 per cent of the budget support goes to fund the PSUs. By March 2016, it is estimated that some 30 per cent of the PSUs made losses. This included the BSNL too.
Air India is a big black hole. It seems despite many prayers and management manoeuvring, it is a lost case, beyond redemption.
It is estimated that 1.2 million Indians work in its PSUs. And the assets they own may be around $ 500 billion. The return on capital is very abysmal and to put in figures it may be less that 8 per cent.
Some 80 per cent of the total profit made by the PSUs come from coal, petroleum products, oil and power generation . It is not to argue that they are all efficient performers as most have regulatory protection. It is better to compare the output per man shift with other countries to know exactly where India stands in term of production efficiency.
State owned banks account for some 70 per cent of the banking system in terms of assets. These banks are notoriously known for NPA—nonperforming assets.
India to learn from Singapore with regard to heading its firms with well qualified professionals. Here it is one of over governance wedded to conservative, cautious and risk averse management culture. The head of many PSUs are square pegs in round holes as far as expertise and educational competence is concerned. PSUs are synonymous to financial distress. Sell offs are the only way out for the PSUs. There are a few PSUs which are fully non functional for years in India like Hindustan Photo Films and Hindustan Cables.
Any prudent government must move from discussions to disinvestment on war footing.
Dr KM Geogre;