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Parliamentary panel deplores govt's lack of interest in sick PSUs

The Parliamentary Committee on Sickness in Public Sector Undertakings has expressed strong displeasure over the increasing sickness in the public sector.

It has identified recurring losses by many of the companies which were taken over by the government from the private sector as one of the main reasons for this phenomena.

Rita Verma (Bharatiya Janata Party) presented the report to the Lok Sabha on Tuesday on behalf of the committee in the absence of its chairman, G Venkatswamy.

The committee also deplored the ''cavalier and lackadaisical manner'' in which the government had been dealing with such vital issues like the restructuring of PSUs. The committee was of the view that the situation is ''quite alarming'' and called for concerted efforts by all concerned to check the phenomenon of growing sickness among the PSUs.

As regards rehabilitating the PSUs affected by liberalisation, the committee expressed ''grave concern'' that some PSUs, especially the sick ones, are yet to recover from the ''after effects'' of liberalisation.

The committee noted that the number of industries reserved for the public sector had come down from 17 to 6 as a result of economic reforms initiated in 1991.

It was of the opinion that having withdrawn most of the privileges which were being enjoyed by the public sector till liberalisation, it was imperative for the government to have ensured at the minimum a ''level playing field'' for the PSUs as compared to the private sector.

The eleventh report noted that if the removal of certain kinds of protection to PSUs was ''inescapable,'' it would have been more expedient had it been done in a methodical and phased manner instead of doing it in one go.

The committee was of the view that before throwing the floodgates open to the multinationals, an environment should have been created in the public sector to face such a challenge or some breathing period should have been provided for the weaker PSUs to cope up with the new situation.

The committee recommended that at least now ''special efforts should be made to rehabilitate those undertakings which have particularly been adversely affected by liberalisation.''

Similarly, the committee expressed ''concern'' over the ''failure in technology upgradation'' which was one of the main factors causing sickness in the public sector, especially in the traditional financially weaker units.

One of the sequels of liberalisation was the precedence being accorded to technological excellence.

The committee noted that the ''main constraint'' coming in the way of technology upgradation was a scarcity of funds for financing the huge sums of money required for modernisation.

It found that although the government had pleaded its inability to finance the modernisation of old plants, in most of the cases, large amount of money was being made available to sustain the units after their financial health had deteriorated. The committee felt that had this assistance been made available in a more planned way for the modernisation of the plants, the state of sickness in the PSUs would not have aggravated to the extent that it had.

Since the situation needs an arrangement for finding resources for modernisation of the public sector units, the committee suggested the creation of a public sector modernisation fund in which resources could be pooled together through loans, aid, etc.

In this connection, the committee also recommended that part of the money realised through disinvestment of public sector shares be made available for modernisation of old plants.

The committee identified that ''management failure'' was a major reason for industrial sickness, especially in the case of public enterprises.

It noted with ''concern'' that in a number of sick PSUs, there is no full-time chief executive and also there have been frequent changes of the incumbent.

There were also, reportedly, quite long intervals between one chief executive leaving the company and the successor taking over on account of a lack of effective succession planning. The damage was even ''more disastrous'' when it is a sick company.

Surprisingly, the government appeared less concerned about finding regular chief executives for loss-making PSUs as compared to the blue chip companies. The committee recommended that since this was a very vital issue for the efficient functioning of a company, it should receive the ''focussed attention'' of the government.

It desired that a time-bound action plan should be drawn up to fill the posts of chief executives in those undertakings which are functioning without a fulltime incumbent and efforts should be made to ensure effective succession planning and continuity in top management.

The committee was ''distressed'' to find that one of the factors responsible for managerial inefficiency in the public sector was the ''appointment of civil servants and others without a professional background'' to this top managerial positions in the PSUs.

There were also instances of over-represenation of government directors on the board. The tendency of appointing civil servants to top posts in the public sector was fraught with various adverse effects.

Besides being ill-equipped to manage technical and specialised tasks, it was found lacking in experience and sills.

The committee felt that government had not paid sufficient attention to forming of a strong management cadre for the public sector. Keeping in view the emerging need to have a very efficient management cadre for the public sector in the face of stiff competition being faced by it in the post-liberalisation scenario, an urgent need was felt to review the existing procedure for selection of top executives for PSUs.

It recommended that the whole procedure for selection of top executives for the public sector should be streamlined and necessary changes introduced. In order to have a pool of competent personnel at the senior levels of public sector management, it desired that a common management cadre for the public sector be created.

UNI