In the earlier years after independence the Government has made huge investments in Public Sector Undertakings, since at that time no individual organization came forward to establish a major industrial organization. Since it did not have sufficient financial, managerial ability. Also to make the nation self-sufficient, increase the employment opportunities, to see that the profits of organization reached to the Government exchequer, to avoid inequality allocation of funds or resources, not to accept or allow foreign investments to avoid becoming colonial state again. The Govt. has taken steps to establish major industrial organizations by investing approximately Rs.1, 00,000 Crores upto the year 2001. The sources for the above said investment were made out of savings made by individuals in Govt. Securities and other receipts. This step was required since the individual citizens were not willing to take risk by investing in major organizations and the Government Securities and savings through Postal Department and other receipts.
At present the situation is like that majority of the Public Sector Undertakings have become “WHITE ELEPHANTS” due to non-accountability to the management at all levels right from the date of establishment. Every organization is having accumulated losses, indiscipline, non-accountability, waste expenditure, monopoly nature of the organization resulted into sick organizations. At the same time the Private organizations are running the same to the members of their investors.
At the commercial angle, the Government is earning a profit of Rs.3000 to Rs.4000 Crores on the investment of Rs.1, 00,000 Crores made in Public Sector Undertakings whereas it is paying interest on Government Savings @9% to @ 10% per annum. Now the situation has changed, Private organizations can establish units to the tune of the requirements up to any extent possible equivalent to Public Sector Undertakings, where investment is made by the Government with help of borrowed funds. Now the Government wants to keep away from the commercial activity where it is incurring losses, indiscipline, non-accountability has increased in the Public Sector Undertakings also make those organizations live again and get responsibility of the management which can be done only when there is profit motive like in Private Sector Organizations. Not more than 10% of Public Sector Undertakings are earning profits and the balance are running in losses or transformed as sick industries.
Also from the angle of competitiveness and also due to liberalizing/globalization policy adopted by the Government since past 10 years. It is advisable to get rid of these Public Sector Undertakings, which are like “White Elephants” suffering from the managerial, financial, and administrative, indiscipline, and on-accountability and accumulated losses. Now there are so many private organizations, which are coming forward with huge investments, which can equally compete with the Public Sector Undertakings with regarding investments, managerial, personal abilities. If not dis-invested today the so called “White Elephants” of Public Sector Undertakings will become sick industries and cannot compete with private organizations where quality, accuracy, performance is given high preference rather than seniority, age, abeyance the Government administrators is treated as the qualification for managing the said Public Sector Undertakings. Also, the management has to follow lengthy procedure to take decision where it required immediately on commercial basis.
As far as obtaining the sale considerations is concerned the Government should adopt the procedure of open and transport tender policy so that the Government can get higher price not based on the balance sheet but based on the actual market value of the assets of the organizations. Also the bidders should be asked to take care of the problems of employees who are working in the organizations in the past several years, who cannot go for new employment due to their experience in the said organization also in –ability because of age and health, family factors.
The dis-investment cannot be considered as sale of the assets of the Government since those are not utilized properly by the management and not viable commercially for the Government when the invested funds are borrowed from the Small investors in Government Savings. But it should be treated as giving life to the organizations afresh with new blood of new direction and make them effective to face competition which emerges in the future from the Private Sector Organizations. Also the possible of losing entire Government Investment for losses of Public Sector Undertakings is possible since the units are incurring losses year-after-after due to over wastage, excess expenditure, indiscipline, wrong planning, requiring to follow lengthy procedure where immediate decision required commercially. Unless there is profit motive and accountability, the management of the unit can take decisions on its own and take risk with good intentions, so that the organizations runs in profit. For this purpose the process of dis-investment is considered as a right step in correct direction. But there may be some discrepancies with regarding procedures to be followed for dis-investment for entire Public Sector Undertakings whereas it can be changed from unit to unit considering factors of capital invested, expected sale price, conditions of employees, and resistances from raw-materials and other factors.
Also the Government should maintain Monopoly on some sectors where those cannot be open to the Private Organizations on account of Security, Secrecy and availability of Supplies etc,.
ADVANTAGES OF DIS-INVESTMENT
- The organizations can be re-activated.
- Sale proceeds can be utilized for repayment of Government loans to reduce interest burden.
- Raw-Material supplier, bi-products units etc will get continuity in their activities.
- Assets of the Public Sector Undertakings utilized effectively.
- Employment opportunities will increase.
- Demand for Raw Materials increase thereby increasing the new opportunities for new entrants.
- The customers will get price reduction due to increase in supplies.
- The Government will get revenue in the form of taxes whereas now it is increasing losses.
- Further effect due to competitiveness in future can be avoided.
- Alternatively, the Government can transfer management only without losing ownership.
DISADVANTAGES OF DIS-INVESTMENT
- Un-rest among the employees.
- Losing Government control assets thereby paring way for accumulation of investments in some hands.
Some crucial, important from security, secrecy, availability supplies, single/monopoly angle may cause troubles in future.
