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Public Sector Enterprises

The document discusses reforms in India's public sector enterprises. [1] It outlines problems like insufficient growth, poor management, and low returns that caused public enterprises to become a burden. [2] Reforms in 1991 aimed to increase autonomy, competition and private sector involvement through measures like identifying "Navratna" companies, professionalizing boards, performance agreements, and employment programs. [3] Other strategies addressed sick enterprises through restructuring, disinvestment of public resources, and reducing public debt.

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171 views18 pages

Public Sector Enterprises

The document discusses reforms in India's public sector enterprises. [1] It outlines problems like insufficient growth, poor management, and low returns that caused public enterprises to become a burden. [2] Reforms in 1991 aimed to increase autonomy, competition and private sector involvement through measures like identifying "Navratna" companies, professionalizing boards, performance agreements, and employment programs. [3] Other strategies addressed sick enterprises through restructuring, disinvestment of public resources, and reducing public debt.

Uploaded by

prasapq
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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You are on page 1/ 18

PUBLIC SECTOR ENTERPRISES

REFORMS IN INDIA

A seminar on reforms in Indian public sector


INTRODUCTION

• What is a public sector?


The Industrial Policy Resolution dated April 6, 1948 said,

• arms and ammunition, atomic energy and railway transport


would be the monopoly of Central Government.
• six basic industries namely, Iron & Steel, Coal, Aircraft
manufacture, Ship building, Mineral oils, Manufacture of
telephone, Telegraph and Wireless apparatus .
INTRODUCTION(CONT..)
• Why Public sector?
• Rapid economic growth and Industrialization and
economic development.
• To earn returns on investment and generate resources
for development.
• To promote redistribution of income and wealth;
• To create employment opportunities;
• To promote balanced regional development;
• To promote import substitutions, save and earn foreign
exchange for the economy.
WHAT IS WRONG?
Problems in the Public Sector
i. Insufficient growth in productivity
ii. Poor project management
iii. Over-manning
iv. Lack of continuous technological upgradation
v. Inadequate attention to R&D and human resource
development.
vi. Very low rates of return on the capital invested .
CONSEQUENCES
• Why the problems?
 Lack of competition
 Complacency
 Unprofessional management
• Results?
public enterprises became a burden rather
than being an asset to the Government.
SOLUTION
• New approach to public enterprises in 1991,
“The New Industrial Policy 1991”

 Policy reserved 9 items for the public sector.

Aimed to,
 ensure that the public sector would run on business lines.
 continue to innovate and lead in strategic areas of national
importance.
REFORMS
• What had to be done?

Liberalization of government controls.


A larger role for the private sector.
Functional Autonomy to the public sector.
Increased competition.
Greater integration with the world economy.
REFORMS
• What Measures were taken?

 Special Status
 Professionalization
 Memorandum of Understanding
 Safety Net
 Attacking Sickness
 Disinvestment
SPECIAL STATUS
• Navratnas:
Government identified 9 Public Sector Enterprises that had
comparative advantages and potential to emerge as global giants.
 given enhanced autonomy and delegation of powers to incur
capital expenditure.
 Given powers to enter into technology Joint Ventures/Strategic
Alliances, to effect organizational restructuring.
 To create and wind up below Board level posts.
 To raise capital from domestic and international market.
PROFESSIONALIZATION

• PSE’s made autonomous board managed


companies.
Autonomy in
 Recruitment
 Promotion
 other service conditions
of below Board level employees.
MEMORANDUM OF UNDERSTANDING
• Introduced in 1988.
• objective system of evaluation of the performance of the
management of the PSEs.
• negotiated document between ,
 Government acting as the owner of PSE
 A specific PSE instrument

specifies the intentions, obligations and mutual responsibilities


of both parties to the Memorandum of Understanding (MOU).
EMPLOYMENT SECURITY
• National Renewal Fund (NRF) in February 1992 for
voluntary retirement scheme(VRS).
• Scheme for Counseling, Retraining and Redeployment
(CRR) in 2001-02
• provide opportunity for,
 self-employment
 Reorient rationalized employees
 Self-employment
 Equipping for new vocations
ATTACKING SICKNESS
• common problems faced/being faced are,
 resource crunch
 erosion of net-worth
 high input cost
 stiff competition
 old and obsolete plant and machinery
 outdated technology
 excess manpower
 weak marketing strategies etc…
ATTACKING SICKNESS
• Strategies for attacking sickness ,

 Revival through Board for Industrial and Financial


Reconstruction (BIFR).
 Financial restructuring
 Organisational restructuring & manpower rationalization
 Board for Reconstruction of Public Sector Enterprises
(BRPSE) considering proposals on restructuring or
closure.
DISINVESTMENT

• Redeployment of public resources on areas of


social priority.

• Reducing public debt

• methods like auction, initial public offer, offer for


sale
CONCLUSION

• The reform process of the Government has met with


considerable success.
• A lot still needs to be done to improve the efficiency of the public
sector.
• The public sector has played an important role in preventing the
concentration of economic power, reducing regional disparities
and ensuring that planned development serves the common
good.
REFERENCES
• “Strategic change in public sector” by Manisha
Sensarma.
• “Reforms in state public sector” by Planning
Commission, Government of India.
• “Public Sector Reform: What Works and Why?” By
Independent evaluation group(IEG) ,World Bank
Support.
• “Information Age Reform of the Public Sector” by
Richard Heeks.
THANK YOU

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