Public Vs Private Sector

Source: The Hitavada      Date: 20 Jan 2018 10:26:13


We must take a good look at what India’s so-called great private sector has done. If we consider the holistic picture, we will start changing our opinions on both sides of the divide.

Public Sector is India’s pride.
- Prime Minister Pandit Jawaharlal Nehru

IT IS impossible to forget this proud statement by Pandit Nehru at the time of India’s acceptance of mixed economy in the late 1940s. Today, what we see around is a painful process of rejection of the idea by accepting the FDI route as a tool for disinvestment in public sector. One can suspect that this may continue at its own pace to see that eventually much of India’s public sector is wiped out.

Certain realities are stark but crystal clear and that India cannot afford to continue with public sector. Even if we accept this dirty economic reality, we must take a good look at how we came to mess up this much-coveted sector of the emerging Indian economy. Such a study would lead us to an invariable conclusion that we must be blamed for the debacle and not the principle involved. We politicised the public sector. We created monuments of corruption to drain out precious money to fill private pockets. We did not follow scientific management practices and allowed public sector undertakings to fall on bad times. We wasted years in parliamentary debates instead of evolving proper procurement, production, HR and marketing practices to run our PSUs. And then we started shouting that we must now opt out of the public sector syndrome.

Then came this new era of divestment in which blaming public sector became fashionable. The country adopted a dirty adage: Give the dog a bad name and beat it with the stick. Now, extending of FDI route to further divestment in public sector is an integral part of that fashion. But it is at this point that we must take a good look at what India’s so-called great private sector has done. If we consider the holistic picture, we will start changing our opinions on both sides of the divide.

Let us look at some realities. The country’s banking system is smarting under the weight of Rs. 1.14 lakh crore of Non-Performing Assets (NPAs), all in the category of private sector. The country’s economy has suffered terrible setbacks not on account of public sector alone, but also because of the planned and conspiratorial mess up of finances left-right-and-centre by private sector undertakings. Fashionably and habitually, India’s private sector continued to talk only of losses and not of profits. The private sector bosses planned and designed losses so that they did not have to share their booty with the Income Tax Department and also with their work-force. And this happened so brazenly and so shamelessly that before anybody realised, the private sector, too, had drained the Indian economy to a terrible low.

And as all this was happening, the private sector honchos and their henchmen in the Government kept blaming the public sector for the grand mess. Yes, the public sector did have its own mess. But the mess in private sector was actually worse, in moral and economic terms. Most unfortunately, nobody ever thought of the massive debacle of private sector in the country. Nobody noticed closure of thousands of private sector units in all categories -- small, medium and large. Nobody realised that it was private sector and not the public sector that was causing a terrible drain on the national economy.

The reason was simple: Even as it kept draining the national economy, the private sector kept blaming the public sector for its failure. It was a political and conspiratorial move that did the public sector in. The Government knew all facts, but kept turning a blind eye towards the private sector loot. On the parallel track, the Government also did not do anything to spruce up the management practices of the public sector. This happened in broad daylight.

True, there really are some very good private corporates in the country. Their management and production practices are really world class. But such companies are not many across the country. In most areas of private sector, what goes on all the time is a crafty mix of bad practices in production, finances, marketing and HR (human resource) management. The Government paid no attention to curbing all those. Much to the contrary, it turned a deliberate blind eye and let the private sector carry on with the loot of public money.

Let us take a few examples of how the private sector has messed up things against national interest. The first and the foremost example is of the hours of work that private sector employees have to put in every day. If in public sector an employee works for eight hours, his counterpart in private sector has to work for a minimum of 12 hours and a maximum of 16 hours a day without getting compensated for. The salaries in private sector are only slightly more than in public sector, thanks to the pay commission route the Government adopted. Yet, the work the private sector employees have to put in is at least twice more than their friends in public sector.

The private sector wanted labour reforms not for welfare of labour, but for their exploitation. This is not a charge made by any ideologically hostile person. This charge was made by many political and social thinkers and economists. There are many serious issues of pollution control, working conditions, ethical and governance practices in private sector. Another funny practice is that the private sector is all the time seeking concessions of this or that manner from paying taxes, from paying banking dues, from repaying the money that it gets from various Government schemes. All these issues need a serious reconsideration in larger national interest. That is our basic call.