Harnessing the potential

A bold intent has been displayed by the government in announcing the massive widespread disinvestment of public sector enterprises. Yes the government is bang on, the true potential of these enterprises can be harnessed only by privatization.

The true objective is to harness the potential and privatization is apparently the means to an end. Exploiting the full potential would give a great boost to the nation’s economy and ultimately the standard of living would go up.

Where have we faltered and we in this case is the sarkari tantra that controlled, guided, gave shape and to top it all laid down the ground rules and the boundaries for these enterprises to perform.

Why these enterprises have not been able to perform as well under public ownership and sarkari management as they would under the ownership of a member of the public and management by individuals picked up based on merits.

Yet the fact remains that organizations that performed miserably while in government control blossomed with a change of ownership. I remember a doyen of the private sector keen on acquiring the national carrier telling us that he would give results without changing even a single employee as he did in all the units that he acquired earlier. He rightly put his finger on the incapability or perhaps the inability of the managements placed by the governments; to manage well.

And it is so true. Both inability due to constrained processes and gross mismatch between authority and accountability and incapability for the process to appoint heads of businesses that the enterprises actually are leaves much to be desired.

There are only a few pain points but they impart all the pain. The foremost is the tendering system that is indeed the bane of the nation and has proven almost impossible to handle. This process that takes the scalps of many invariably has in the long run proven to be more important than the end result itself, that of entering into the contract for supply or execution of goods, services or projects. The tendering system needs to be simplified and not cast in stone for in my view a process cannot be given a place higher than the objective for which the process was actually put in place.

Rank mistrust at all levels and the glorification of agencies that merely find faults in hindsight or counsel others on how they should be doing their jobs has caused damage deeper that what is apparent at first sight. A deviation from the written word even for attaining the higher good has almost been criminalized and the fine distinction between a mistake and a malafide has been thoroughly blurred. As a result while corruption could not be checked, initiative has got subdued nice and proper.

And there is a glaring absence of incentive and premium on deliverance. People who deliver should not be fearful and fear if any should be openly dispelled. The supremacy of deliverance if established can  place the public sector at par with the private for after all it is actually the same Indian guy who is manning positions in the entire public and private sectors regardless of the shades of ownership. In one he is encouraged to deliver while in the other he is afraid to go the extra mile that deliverance warrants.

While to me it appears possible, perhaps it may not be easy to change the working environment in the public sector and disinvestment has rightly emerged as the inevitable administrative compulsion.

The objective is economic growth and we need to move forward on the path that takes us there.

The indian public sector

With many public sector undertakings steadily losing their relevance due to sliding market share or becoming financially unviable, the rationale for their existence has indeed weakened over a period of time. This scenario has often necessitated disinvestment, an exercise that would enable tapping the full inherent potential of the undertakings in the national interest.

The emergence of the public sector in the country just after independence was with the avowed objective of enhancing manufacturing and services, especially in areas where the private sector either did not exist or was unable to enter on commercial considerations. The public sector units then fulfilled a very vital need and were also regarded as the temples of modern india.

It was in 1948 that India got its first CPSU in the form of ITI (Indian Telephone Industries Ltd) and their numbers grew thereafter with now almost 300 of them operating across a wide spectrum of sectors such as banking, coal, engineering, power, oil, steel, textiles, airlines, hotels etc. in addition there are also many state level public sector units.

CPSUs were set up to play a pivotal role as envisaged in the economic model adopted by the country in the post-Independence era. Their contribution in terms of job creation, social welfare, and overall economic growth of the nation has indeed been substantial. The policy for setting up of CPSU’s was not only guided solely by profits but was primarily inspired by the need to spur growth in remote and backward areas of the country and generate employment. 

It is however since the eighties that public sector rapidly started losing its sheen due to lack of relevance or financial losses or both. Lack of professionalism compounded by the ever increasing complexity of processes, excessive oversight and over indulgence by the investigative agencies triggered this downslide.

CPSU’s were formed under the companies’ act same as that for private companies with the underlying intent that they should function commercially like the private sector, regardless of the ownership. With passage of time however, the intent got confined to paper for the bureaucratic and political classes could never truly accept a scenario where a flourishing commercial enterprise is under the ministry but not under the thumb.

Another instrument to ensure commercial and administrative freedom, something so vital for running businesses successfully, was the “presidential directive” that can be issued by the concerned ministry to the undertaking only in exigencies, not on normal commercial and administrative matters. Unfortunately over the last few decades, the spirit of this directive has been held more in breach.

PSU’s have unfortunately also often suffered an overdose of oversight, when actually it was neither envisaged nor meant to be. Too many cooks spoil the broth is so true.  

Selection of people for leadership positions in public sector undertakings needs to be based on assessment of leadership qualities and not merely subject expertise. The private sector that on the other hand is finicky while undertaking the process of selection, subsequently gives a very long rope for the selected guy to perform quite unlike the scenario where even the top management lives under the shadow of mistrust from day one. 

Governmental tendering systems that the public sector is mandated to follow while their competition in the private sector is not, cripple creativity and timely deliverance. The system focussed on the L1 is the same for purchasing potatoes, ideas, machinery, IT and in fact anything under the sun. The massive trust deficit coupled with emphasis on processes as against deliverance acts as the biggest road block to implementation. And with investigative agencies glued to finding faults that too in hindsight and treating mistakes as malafide, the process has also achieved the dimension of fear.

The fear of taking a wrong decision, judged wrong in hindsight of-course generally by unconcerned officials and then paying the price thereof has engulfed the managements of the public sector who have generally turned risk averse. Many realize that the best way to avoid making mistakes is to avoid taking a decision and this thought has spelt doom for many enterprises.

Selection of people for leadership positions in public sector undertakings is also an exercise that leaves much to be desired. The brief exercise generally focuses on knowledge rather than the leadership capabilities of the guy under consideration. The private sector that on the other hand is finicky while undergoing the process of selection, subsequently gives a very long rope for the selected guy to perform quite unlike the scenario where even the head honcho lives under a shadow of mistrust from day one.  

The abysmal financial condition of many CPSU’s in most of the cases is not because of lack of effort or capability, but because the rules and procedures mandated are not suited for running enterprises on commercial lines.

The below par realization of the potential and the downhill slide of the public sector is indeed not an acceptable scenario. Disinvestment has emerged as an inescapable administrative compulsion and perhaps the only option. After all governments are not meant to be in the business of running businesses.

State firms fail because of inept management

(This article was published in the HT of 17/10/2013)

On October 10, civil aviation minister Ajit Singh told a private TV channel that the national carrier - Air India will have to make itself  “profitable or a subsequent government will have to explore at privatising.” The statement created a flutter reminiscent of the era of disinvestment when the hospitality sector giant India Tourism Development Corporation (ITDC) and many others were sold off.

As the head of ITDC, I was often amused at the irrationality of the excuses trotted out for justifying the sale of the family silver — governments should not be in the business of running hotels, the company facing huge loss and the government needs money — were the three major excuses trotted out, but without substance. The counter-arguments were: if the government can’t run even hotels profitably then can it run the nation, give us time and the company will be as profitable as those in the private sector; and if the aim is to maximise sale proceeds why not sell through an open auction and why attempt restricting post-sale operations.

Major properties were palmed off at prices that would not fetch even a decent house in the outskirts of Delhi. Unfortunately, the tremendous enthusiasm over selling the family silver overshadowed the need for sanity.

The theory that governments should not be running businesses and, therefore, get rid of them is inherently faulty. Running a business enterprise requires sound commercial sense. That is why private enterprises burn the midnight oil while selecting their chief executives. Had the same diligence been applied while choosing CEOs for State firms, the story of even the national carrier could have been different. With the might of the State behind it, the public sector has an inherent advantage over the private sector. Unfortunately, this advantage is now being frittered away.

Also, the latent strength of the Indian public sector enterprises lies untapped even after 66 years of Independence. It defies common business sense why many of these commercial enterprises set up with public funds and backed by the State perform so badly.

The reason lies in inept apex management as often the criterion for appointments lack merit. That the kinds of ownership and technicalities are mere peripheral issues and what matters is the commitment, zeal and integrity of the person in charge of these enterprises.

Air India and ITDC are textbook examples of inherently profitable business enterprises brought to the mat by inept managements.  Contrary to public opinion, blaming political masters or the external environment for the ills of a company merely diverts attention and shrouds the real causes. The fact remains that the ‘companies act’ and the ‘memorandum of articles’ sufficiently empower the chief executives to ward off any hostile threats to the efficient working of the enterprise, yet in many cases the chief executives lack leadership traits besides showing undue eagerness to succumb.

Any commercial enterprise, be it the local paan shop or a multinational corporation, is only as good as its leader, or in other words the officer who heads it.

Unfortunately, most of the senior officers only look upwards and display extreme keenness to be identified as the blue-eyed boys of the powers that be. They achieve that goal but in the process the company they head often lose out.

The search begins!

The nation searches for a leader.

In a Loktantra governed through Prajatantra and therefore an overall dismal failure so far, the search for a leader is once again center stage. With the ruling dispensation projecting the royal heir apparent and the opposition rooting for Modi, the guy who turned around Gujarat, the populace would once again have to make a choice between two commodities, both of which have their obvious pluses and minuses.  It however is undeniable that the Modi wave has taken the nation, almost by storm.

It is true that Modi has found favor amongst almost all the sections of the society. The rickshaw wala, the panwala and the small time grocer, all are rooting for Modi and rightly so, if he has proved to be the messiah for Gujarat, he has the potential to be one for the nation too.  The brightest ray of hope is apparently visible.

Since the last over six decades, the gullible public of this nation has been bending over backwards to place on the pedestal anyone who appears inclined to take the nation forward. Yet its hopes have regularly been belied as the nation has rapidly proceeded downhill and at the same time provided ample opportunities for loot by the cohorts of the chosen guy. Bofors, disinvestment, 2G, 3G, CWG, Chara, Coalgate, Adarsh and many others, the loot that has perpetually been on has picked up speed during the last couple of years. The gullible public in its heart of hearts sincerely wants someone at the helm who will stem the rot and take the nation forward, and that someone as things appear now is either Rahul or Modi. A progressive young heir versus a man of integrity and conviction who is steeped in deliverance. The battle is indeed going to be exacting and interesting.

It is indeed a turning time for Hindustan. The previous year witnessed the maturing of a nation, the constituents of which inspired by the clarion call against corruption started turning out on the streets of many of its major cities. For the first time ever, the average Indian moved out from the comforts of his home to the streets, heeding an undeniable call of conscience.

What is going on presently cannot be allowed to go on perpetually. The various scams are indeed a blot on the collective conscience of the nation. An operation clean up is the need of the hour and the first step in this direction has apparently been taken at Panaji yesterday.

May God pull this nation out of the morass it has brought itself to!

The naked truth

The turmoil that the masters in the art of corruption have presently brought about in the nation is appreciable, if only for its never before magnitude. That even members of the national cabinet can put on display a character that would better suit a mafia don is something that we are a sad witness to for the first time in the history of India as a free nation. That the two main national parties are almost equal rivals in the art of corruption is also a reality that has caught the imagination of the nation.

“Hamam mein sab nange hain” is what even newly born are heard uttering these days with almost amazing regularity.

I am reminded of the days when in the mid eighties we learnt through the media and political utterances that  India is great and then in the late nineties that the nation is shining. That the shine and the sheen always remained restricted to certain select members of the then ruling establishment was never in doubt. Yet the culpability of a senior member of the cabinet remained under covers till all hell broke loose when the issue of selling national silver at throwaway prices caught the attention of the masses. Disinvestment of certain prized yet undervalued public undertakings at prices one would laugh at had emerged as the primary focus of the establishment that had vested interests tucked away almost everywhere, almost akin to the present times.

Literally booted out I was, yet the priceless “Ashok” at Chanakyapuri lived and that one victory which made me almost a pariah for a few months till the issue was forgotten, has been my most cherished possession. I now fully appreciate after almost a decade of greying further that the fight that I then undertook was an offshoot of the anger every right minded citizen of the nation feels when the politicos or the bureaucrats usurp what belongs to all of us. Yes I was angry, extremely angry in the frustration that follows the inability of a protector to protect. That the establishment and the anti establishment had as always become silent partners in looting the nation is a trend that invariably continues to this day.

And we the common men rightly feel cheated when the guy we elected as the custodian turns out to be the crook. And the thought that India is only for men with power or men with money and not for the aam Hindustani gets ingrained deeper and deeper with time.

In hope we live. Insha Allah!