Page 221 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Unit 18: Issues and Problems of Public Sector

also be opened to its employees. Besides, professional and technical persons of an undertaking Notes
should be trained and induced into management.
The Government has been shedding the load of surplus workers in PSE. As a result of this
policy, total number of employees in Central PSEs declined from 19.92 lakhs in 2001-02 to 16.14
lakhs in 2006-07—a reduction of 3.78 lakhs. This has reduced the wage cost of CPSEs.
(vii) Capacity utilisation : During 2005-06, out of 203 units, 103 units or 51 per cent of all
manufacturing/producing units had recorded capacity utilisation of more than 75 per cent. On
the other hand, 33 public sector enterprises operated in the capacity utilisation range of 50 to 75
per cent and 67 functioned below 50 per cent utilisation of rated capacity. This is certainly not
an optimum situation. It is very necessary to find the causes of low capacity utilisation and thus
remedy the situation by appropriate measures.
(viii) Inefficient management : Managerial effectiveness and efficiency are crucial factors in improving
the overall performance of the public enterprises. For efficiency in business and industrial
enterprises it is necessary that operational decisions are prompt. This necessitates a large measure
of autonomy and flexibility of operations in the Government enterprises. Again, delegation of
authority and elasticity in working are needed in a high degree. Within the enterprise itself the
delegation of authority from the top management to lower levels is another essential condition
for efficiency in operation. Every officer should know what he is required to do and what result
he is expected to produce. Unfortunately, there has been general failure to define responsibilities
and duties in public sector enterprises in India. Finally, the successful operation of public enterprises
is dependent upon the availability of experienced persons to fill up top positions. Public enterprises
are sarcastically referred to as ‘colonies for bureaucrats’. In the initial stages, the officers of the
ministry who provided funds for the projects also pre-empted the right of management. In this
way they infused ‘bureaucratic blood’ in the system. An unfortunate practice has been to use
bureaucrats as chairmen, managing directors and managers of public enterprises. Many of them
are not really qualified to run industrial enterprises. The government has been progressively
shifting to professionalised management in these enterprises. This is a healthy development.
In conclusion, it may be pointed out that the picture of the public sector generally painted by
the Federation of Indian Chambers of Commerce and Industry, Forum of Free Enterprises and
such other organisations is too black. It is equally true that all the public sector enterprises are
not functioning efficiently. The competitiveness of the private and public sector projects should
act as the motivating mechanism for improving efficiency in both the sectors.
Self-Assessment
1. Choose the correct option:
(i) Which is the most basic cause of an issue being placed on the policy of agenda?
(a) Increased public attention on a particular issue
(b) Knowledge that an existing problem can be ameliorated through
(c) Previous lack of attention to a known public need
(d) Public problems highlighted by the operation of a free market system.
(ii) Selling of state owned assets
(a ) Deregulation (b) Privatisation
(c) Intergration (d) Nationalisation
(iii) Removal of government control over industries
(a) Privatisation (b) Adminstration
(c) Sequestration (d) Deregulation
(iv) A cost of privatisation
(a) Loss of income to the government (b) Loss of customer choice
(c) Reduction in shareholders (d) Loss of employment

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