Though the government share holding pattern may be similar in different public sector units, there is a significant difference in the work culture in government organisations even in the same sector. This is mainly related to the background of the company, how it has evolved and the management.
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Most businesses or service providers specialise in one thing – teachers who produce education, or workers who produce products, or shopkeepers who bring up the goods we need. But everybody consumes many things every week – food, clothes, soap, cosmetics, electricity, television programmes and more. Sensibly, we consumers want the most for our money, so we encourage efficiency by purchasing the best products and services at the most affordable prices.
Everytime that government bans an imported good, or slaps a tax on an imported good to make it more expensive, it encourages inefficiency in one sector or another. If we create special taxes for foreign sugar, or foreign cloth, or foreign toys, we make consumers pay more, and make consumers subsidize the inefficiency of domestic companies that are not working as efficiently as they could. If you try that for one commodity, you penalise people who consume that Indian consumers will pay far too much for shoddy goods and the country as a whole will grow poorer and poorer without the improving effect of competition.
Instead, our lagging industries need to learn to compete, and that is not too difficult. Already India’s finished garments and IT services and other products are appreciated the world over for quality, efficiency and competitive costs. Globalisation, in the form of World Trade Organisation reforms, are designed to lower foreign tariffs which were originally designed to protect their own inefficient producers from Indian competition. So markets. Where our productivity is strong, the new global trade rules will let us conquer foreign markets. Where our productivity is weak, we need to invest more, harder, and become more efficient at what we do. Considering that overseas Indians are among the most successful and best-respected business communities the world over, we clearly have the talent to succeed right here at home.
Worker buy-outs almost always fail. First of all, workers rarely own or can borrow sufficient money to buy the enterprise, much less to replace antiquated machinery. And they tend to be inexperienced in those areas in which businessmen specialise – borrowing money, issuing shares, insuring their company and marketing their products. Entrepreneurship is an unusual and demanding skill, and most workers – indeed most human beings – do not have that skill. So turning a company over to its workforce is often the cruelest strategy, because then the company dies a slow, lingering death as workers struggle to do something beyond their capabilities.
The same can be said of privatising companies to the current crop of cooperatives. Today these tend to be public sector enterprises, which have most of the shortcomings of other SLPEs. Of course, if cooperatives were converted into Mutually Aided Co-operative Societies and developed a proven track-record of commercial success, then they might well be equipped to rescue a former government-owned company.
Privatisation is the best way to resuscitate and rebuild weakened State Level Public Enterprises (SLPEs).
Privatisation :
* Stops loss-making SLPEs from adding to government debt;
* Depoliticises SLPEs, remove governmental pressures for over-manning and the sub-optimal use of resources;
* Gives new owners a strong incentive to turn around failing SLPEs into successful businesses;
* Gives new businesses access to investment capital that government cannot provide;
* Raises more money for government through taxing former SLPEs;
* Expands an enterprise and an industry, in the long run creating more jobs and generating wealth for the country.
Public enterprises, privatisation