Search the Internet          Tips  Sites: Finance, Investment

The Rs 100,000-crore man

A V Rajwade

In the 55th year of Indian independence, one person who has contributed the most to the wealth of the community and fiscal balance is Arun Shourie, the minister for divestment.

His contribution can easily be estimated at around Rs 100,000 crore (Rs 1,000 billion)! The biggest chunk of this, is the rise in market capitalisation of public sector undertaking stocks since he has taken charge of divestment. Such a rise in valuation comes to around Rs 70,000 crore (Rs 700 billion): that too in an otherwise moribund market.

Clearly, the privatisation of 20-plus companies and hotels in a relatively short time would not have been possible without the full backing of the prime minister. But any minister in that role would have had this backing, without necessarily succeeding in carrying out the policy as well as Shourie has.

Of course, a lot of spadework was done by the Divestment Commission and Arun Jaitley, Shourie's predecessor. However, the lion's share of credit should go to Shourie for his prodigious homework, his detailed and data-backed arguments and the transparency of the entire process. This was also evident in his defence and articulation of divestment policies in 10 different parliamentary debates, spanning over 80 hours!

More than 600 questions on the subject were answered in Parliament and the government also faced - and won - 19 court cases, including one filed by the Chhattisgarh chief minister in the Balco case. In many ways, Shourie's performance helps sustain (an admittedly weak) belief in the ability of democracies to function efficiently. Given conviction, transparency and articulation, policies can be carried through.

Following from Shourie's earlier avatar as a journalist, he wrote three articles in a leading newspaper on the state of affairs in the public sector. One can hardly recall any other minister doing something similar in trying to explain his policies to a wider audience.

The series throws light on the lack of elementary administration, accountability and governance in many PSUs. Surely, the maintenance of accounts, availability of basic agreements and information, a modicum of disciplined behaviour and so on are obviously necessary for any organisation.

The instances cited in Shourie's articles are examples of gross negligence and the unconscionable waste of public money year after year. Ironically, governance of public sector units seems to be even weaker in states that have been ruled for decades by leftist governments having great faith in the "public ownership of the means of production".

One would have expected them to have made every effort to make a success of these undertakings, not only in pursuit of ideological conviction, but also to serve as shining examples of how much better the public sector could do compared to the private sector.

To quote from Shourie's article about West Bengal's state undertakings: "There are 82 of these - 71 of them are government companies, 11 are corporations. Taking share capital and loans together, a total of Rs 18,241 crore (Rs 182.41 billion) have been invested in them.

"Against this investment of Rs 18,241 crore, only five companies earned a marginal profit of Rs 6.55 crore (Rs 65 million).

"Of the 71 government companies, only 17 had finalised accounts for 2000-01. Accounts of the remaining 54 companies were in arrears for periods ranging from one to 15 years. Out of the 11 corporations, only two had finalised its accounts for 2000-01 within the stipulated period. The accounts of nine corporations - for which information could be obtained - were in arrears from one to 19 years".

Will anybody ever be held accountable for this culture of callous irresponsibility? All such arguments are meaningless if one equates profitability with the exploitation of society; the corollary to this is that losses constitute a contribution to society! In that sense, of course, the public sector's contribution to West Bengal has been enormous.

One does feel sad in downgrading the performance of the public sector, if only because one has spent almost two creative decades of working life in that sector. However, the public sector has a large pool of talented and dedicated managers. So, if human resources are not to blame, what was the root cause of the generally dismal result? The blame has to be laid squarely on our politicians, who have used the public sector as a captive fiefdom for distributing patronage, and for creating a culture where the CEO was far more interested in currying favour with Delhi than in the organisation's performance. Contrast the treatment meted out to V Krishnamurthy, the head of some of the most successful PSUs a few years back, with the way the Tata group is defending Kishore Chaukar!

But coming back to Shourie, the sad part of the political economy is that, whatever his effectiveness, he is unpopular with the Parivar faithful. Will he last another six months? I would not bet even a tenner on that!

Powered by

ALSO READ:
More Specials
More Money Headlines