Several eyebrows were raised when the Manmohan Singh government decided in December 2004 to set up the Board for Reconstruction of Public Sector Enterprises and appointed Prahlad Basu to head this body. Not because a body like BRPSE was being set up, but for entrusting Basu with the responsibility of recommending major changes in the way the country's public sector is being run.
Even as secretary in the Union government in the 1980s, Basu had few friends in the various ministries he functioned. He was a knowledgeable fellow, but his inability to take the team along with him in the implementation of the tasks often created problems for him.
Not surprisingly, Basu in his new role as the BRPSE chairman was soon engaged in a turf war with bureaucrats in the industry, ministry and this no doubt impaired his functioning.
He put together several recommendations for many PSUs, but most of these were aimed at reviving sick companies with infusion of fresh capital or loans. A few of these suggestions were accepted.
But many of his recommendations were never taken up by the ministries concerned to be considered by the Cabinet. He even put forward a suggestion that BRPSE or the Department of Public Enterprises under the industry ministry should be permitted to present proposals for restructuring PSUs directly before the Cabinet. That proposal too was never accepted.
In short, the pace of public sector restructuring, an avowed agenda of the United Progressive Alliance government, remained very slow.
Even Prime Minister Manmohan Singh was reported to be unhappy with the way public sector reforms were not taking off and the BRPSE had failed to usher in substantive changes with concrete suggestions.
With no corrective steps in place, ministers and bureaucrats got into the act and began interfering even more in the functioning of PSUs. Autonomy of PSUs in the UPA government thus turned out to be the biggest casualty.
In sharp contrast, public sector reforms in various states in the country present a much more reassuring picture. Most of the states do not have any BRPSE-like committee to make suggestions for restructuring the companies owned by them.
Yet, if you go by the latest data collated by the World Bank, more than one-third of the PSUs owned by different state governments have seen some reform or the other in the last few years. And by reforms, the World Bank data meant privatisation, closure or restructuring.Andhra Pradesh heads the table of state governments that have moved fast on public sector reforms. It has privatised 13 PSUs, closed down 12 and restructured six more. Orissa is not far behind with nine cases of privatisation and 11 closures.
Gujarat has privatised three PSUs and closed down six others. Karnataka may have privatised only two PSUs, but it has shut down 11 of its state-owned enterprises.
Even Uttar Pradesh's track record is not bad with 14 closures and one privatisation and with one more unit being restructured. Punjab and Tamil Nadu have closed down six and seven units, respectively.
The surprise in this list is Maharashtra, which initiated reforms only in four out of the 65 state-owned enterprises it has. It has no case of privatisation or closure to report so far.
The bigger surprise is Kerala, where 40 state-owned enterprises have been taken up for reforms, out of which 10 units have already been closed. One wonders what corrective measures the newly elected Left-ruled government will now initiate in Kerala. Even Buddhadeb Bhattacharya's West Bengal has initiated reforms only in 15 of the PSUs.
The World Bank data on states and the UPA government's record on PSU reforms seem to suggest that the task of restructuring state-owned enterprises can hardly be achieved by entrusting this responsibility to a committee.
Why Andhra Pradesh, Orissa and Gujarat moved ahead on PSU reforms is perhaps because these states had a political leadership that was convinced of the need for closing down unviable sick state-owned enterprises or privatising the ones it could dispose of.
As far as the UPA government is concerned, the top political leadership is more keen on reviving the PSUs, irrespective of what economic logic may be demanding.
It would not be wrong to conclude that BRPSE is fulfilling that agenda. It is, therefore, time BRPSE was wound up. This would at least permit some of the right-thinking ministers to move ahead with reforms of PSUs under their control.
