Pranab Mukherjee?s post-Budget commitments on disinvestment has enthused everyone. But UPA shouldn?t get away with its rhetoric on the public sector. The repeated chanting of the mantra that the public sector is a pillar of strength must be questioned frequently because for the economy, the government?s large economic presence is costly and inefficient. Consider the fact that 20 years after reforms, the government is still in business in sectors such as textiles, consumer goods, tourism and hospitality services, trading and marketing services, technical consultancy services and contract & constructions services. There are around 70 companies in such businesses and they account for a third of the 214 central PSUs currently operating. These are areas of business where no smart government will ever be involved and to the extent UPA pretends otherwise, it must be asked to explain itself. Audited PSU results for 2007-08 show that textiles, consumer goods and tourist services PSUs made a total loss of Rs 2,525 crore. More, continuous losses in the textile and consumer goods segment have eroded the entire net worth of these PSUs. The net worth now stands at a negative Rs 1,665 crore and Rs 13,731 crore, respectively, for PSUs in these sectors. In the textiles sector, 5 PSUs made losses of Rs 2,021 crore on a turnover of Rs 490 crore?a staggering statistic. The picture isn?t prettier in other sectors. The ratio of profits to turnover was just 0.7% in trading and marketing services and 3% in contract and construction. Total investment in these sectors is around Rs 45,274 crore. That?s taxpayers? money going to complete waste. Just think of the public resources that will be freed up if the government exits these sectors. Or think how much public money is still disappearing in efforts to help PSUs that are beyond help. ITI has been receiving bagfuls of cash. Between 2004-2007, it got Rs 1,302 crore. ITI still made losses in the last three years. This Budget has given it Rs 2,820 crore as financial relief. Doubtless there will be something in the next Budget, too. And when you finally consider that 54 central PSUs have, between them, accumulated losses of Rs 96,636 crore, you really begin to understand why UPA?s public sector story is very disingenuous.
There?s no evidence at all the UPA will do even the smallest rethink on this issue. That?s most perverse because a government that wants to spend big on education, health, and food security should understand the value of resources freed from spending on sarkari hotels and construction companies. State socialism is anti anti-poverty programmes.
