Speaking at a Ficci seminar on the restructuring of PSUs, he pointed out that there have been many instances where financial restructuring has been resorted to more than once.

"Care should be taken to ensure that financial restructuring does not become a meaningless ritual but results in improving the financial health on a permanent basis," Ganesh said.

Further, he added, financial restructuring is only one method and not the most important one. It is business restructuring which is the most important, he said.

The most difficult exercise is labour restructuring, Ganesh said. "Labour should be involved in consultations of privatisation, as in the long run privatisation increases investment and employment."

He lamented that hardly 10 per cent of the National Renewal Fund wasused for the retraining and redeployment of laid-off employees.

Often PSUs' functioning is constrained because they have to achieve as many as 28 objectives, not all of them are related to business, and some of them being mutually contradictory, he said.

Calling for more autonomy for the PSU board, Ganesh said that the it should borrow from the market instead of looking askance at the government.He demanded that the divestment panel's recommendations be taken in totality, and that the money earned should go to the social sector.Efforts should also be made to reduce PSUs' "fear psychosis" of bodies like the CBI and the CVC. "Political control should be restricted to the Committee on Public Sector Enterprises," Ganesh said.

MTNL chairman & managing director S Rajagopalan pointed out that a major problem with the public sector is that often the owner, that is, the government, takes actions which are disastrous for the company. Another handicap is that the top management has no stake in the company.

Yet,PSUs can perform excellently if the top management is determined. The CEO should be bold, frank and articulate, Rajagopalan said.

He ridiculed the idea of crossholdings.

PSUs have contributed handsomely towards saving in foreign exchange resources and reduction in import dependence. They have played a substantial role in development of the Indian economy, he said.

While looking at the performance of PSUs, we should bear in mind that a large number of currently loss-making units in the public sector are those which were originally in the private sector, like NTC, and which were taken over by the government for a variety of socio-economic reasons. These PSUs suffer from poor technology, outdated machinery and plant, and lack of international standards, the MTNL chief pointed out.

Birendra Kumar, managing director & CEO of SBI Capital Markets Ltd, said that privatisation would be meaningful only if government equity goes down below 50 per cent.

Privatisation would improve efficiency and performance,increase competitiveness of industry, make access to funds and technology easy, and effect corporate governance, Kumar said.

Further, there are wider benefits, too, which spill over to the rest of the economy such as development of the domestic capital markets through their broadening and deepening, he said. There is a need for a privatisatio policy which will broadly lay down the guidelines for privatisation such as how PSUs would be categorised for the purpose, he added.