Points: 1. Which is better – Public sector or Private sector?
2. Examples, citing reasons
3. Issue of job security
4. Issue of privatisation
5. Conclusion
The old debate of the public versus the private sector – which one of the two is better for the growth of Indian economy – has been long alive. It has assumed increased importance with India’s impressive performances in the last decade in all fields: health, IT, computer software, telecommunications, generation of energy, manufacturing of industrial goods etc.
The popular belief is that most of the public sector undertakings are white elephants – a drain on the Indian economy. However, the fact remains that many public sector undertakings, mainly in the fields of telecommunications and petroleum and gas explorations such as the Bharath Sanchar Nigam and the National Thermal Power Corporation, have outperformed most of the private sector undertakings in the same fields and registered more profits than them.
In telecommunications, the Bharath Sanchar Nigam continues to lead from the front leaving many big and reputed private players such as Bharti Mobile, Bharti Telenet, Tata Internet Services etc., far behind. Where the private players have even made losses, the Bharat Sanchar Nigam has made huge profits. In the banking sector, too, public sector undertakings remain far ahead vis-à-vis most of the private players in the business.
In the finance sector, predominantly banking, public sector undertakings have accounted hugely for the aggressive net profits compared to private sector undertakings. The situation remains same even now.
So, are public sector undertakings not the proverbial white elephants? Public sector undertakings are not loss making ventures. Many, in fact, are miles ahead of their private counterparts. However, the situation, on the whole, is somewhat different. Private sector undertakings, being overall more competitive and profit-oriented, are still better for the growth of Indian economy. What tilts the balance in favour of private players is the fact that majority of big private players are fiercely competitive and driven by the passion of adding cutting-edge technology to their ventures. For example, Reliance and Tata group of companies, Infosys and Oberoi group.
Besides, the private sector scores over the public sector undertakings in management, administration and other departments. A majority of executives and other employees in public sector companies lack the needed professionalism and the desire to excel in their respective organisations. Business/marketing heads in public sector undertakings may not be periodically monitored the way they are in most of the private sector undertakings; if one is not performing on expected lines over a period of time, he or she is shown the door in private sector undertakings. Perhaps, this is the main reason why companies such as Infosys, Oberoi group of hotels and Reliance are continuously registering impressive performance and setting high benchmarks in net profits.
However, there are exceptions in private sector as well as public sector. For example, Kingfisher Airlines was ordered to stop its operations, mainly due to mis-management. Now, its liability to the financial institutions is about Rs.7,000 crore. In the same aviation industry, public sector Indian Airlines is also making huge losses year after year.
As far as social welfare and job security are concerned, most of the private players perform rather miserably as compared to the public sector undertakings. Few private players are much concerned with the welfare of society, their main motto being to make as much profit as possible. While employees in a public sector undertaking derive a whole range of benefits, the ordinary employees are given very little benefits in private sector undertakings.
For that reason, the Left parties oppose privatisation of an organisation or a group of organisations whenever such a proposal comes to light. The Left parties were against privatisation of big airports in Delhi and Mumbai for the same reason. The privatisation efforts in areas such as airports were opposed by many in order to protect the interest of the workers. Under pressure from such quarters, The Government has also been keeping sick public sector undertakings alive, which is a drain on the exchequer. But then the infrastructure and performances of the public sector undertakings continue to remain sub-standard and it has a retarding effect on the overall growth of the Indian economy.
In this matter, the private sector organisations score heavily over public sector undertakings. An organisation or a company managed and run by private players is either overhauled completely, or shut down if it does not perform well or is continuously making losses. But, private sector undertakings do often crush the consideration of welfare and security of employees to make maximum profits.
The need of the hour seems to be maintaining a delicate balance between the private and public sector undertakings in India. Capitalism is as much necessary for India as socialism. While the kind of blatant capitalism practised by many western nations may not be equally good for India, the socialist mode of development as practised by many East European nations, China and Russia, may also not be suitable for the Indian economy. To conclude, maintenance of a fine balance between the two could prove to be an effective solution for the Indian economy. *ZZZ*