Do more by doing less
- The government’s creativity and persistence in divesting the national carrier must be replicated with most of the remaining 360+ central PSUs
- Air India’s sale is important for three reasons — priorities, resources, mindset — and is a template for the Indian state to do more by doing less.
Issues in running Public enterprises by state
Unfair disadvantages in human resources
- Air India had 12 trade unions, employees per plane were double global standards, and employee cost was an abnormal 20 per cent of revenues.
Neglect over sectors of Human resources
- The resources are diverted from state’s core job — security, primary healthcare and education, research funding, justice delivery, etc which suffered after Independence because scarce public resources were diverted to doing things that the private sector could do better.
- State sector firms indulge in “investment hunger” and don’t fear losses because they know they will be bailed out.
- Air India costed the government only Rs 2.5 crore to buy, but it has incinerated Rs 1.1 lakh crore since 2009.
- Government’s creativity and persistence in divesting Air India must be replicated with most of the remaining 360-plus central PSUs.
- In parallel, with state government finances also ravaged by the pandemic, states privatising over 1,500 poorly run state PSUs could ease fiscal woes.
- Leaving the command, control and conquer mindset and regulating private sector only where needed in larger public interest.
- Focussing on performance rather than merely doing the job by officials.
- Privatisation hardly means a weak or small state; a modern state is a welfare state.
- Under Deng Xiaoping and Zhu Rongji, China converted over two-thirds of its state-owned enterprises to private ownership, boosting productivity manifold.
- China is powerful because of a $14 trillion GDP fuelled by private entrepreneurs, foreign investors, and multinational companies.
- The top ranks of Norway, Sweden, and Finland in government spending as a share of GDP are financed by their private efficiency.
- Thus India should look for ways to improve the efficiency of its private sector rather than state occupation of sectors.