Recasting PSUs

Updated: Sep 28 2004, 05:30am hrs
According to newsreports, the National Advisory Council headed by Congress president Sonia Gandhi will play an important role in deciding the terms of reference of the Board for Reconstruction of Public Sector Enterprises (BRPSE).

This is indeed surprising. The finance minister has already spelt out the Boards mandate quite clearly in his budget speech in July this year.

The Board, according to him, will advise the government on measures to be taken to restructure PSUs, including cases where disinvestment or closure or sale is justified.

So where is the need for the NAC to poke its nose Clearly the Council hasnt heard of the old adage, too many cooks spoil the broth.

Never mind that these are issues that have been thrashed threadbare by more than one commission in the past. Never mind also that the NAC really has no locus standi to make recommendations on such matters. Nor does it have the expertise.

PSU recast is an issue that lies strictly within the governments domain from the political perspective and then within the domain of an investment bank/consultant who can provide the necessary technical advice.

In any case, the answers do not call for rocket science. If the public sector today is still in a sorry state, it is because reports of various commissions that have gone into the matter have not been taken seriously.

Successive governments have opted, instead, for an ad hoc approach towards the public sector. A majority of the PSUs, barring the oil majors, are in precarious financial condition largely due to constant interference by the political class and bureaucracy in their functioning.

The net result is that PSUs have become bleeding ulcers for the exchequer rather than the family jewels they are touted to be.

If the political class is really serious about turning around PSUs so that they function along commercial lines, all they need to do is let go of them.

However, given how politicised PSUs are today, this is easier said than done. No minister or bureaucrat wants to let go of his fiefdom.

And it is unlikely that another Board which receives directions from bodies like the NAC will make a difference to that.