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India's Economy : Time to say good-bye to all Govt. subsidies ?
Saumen Sarker, Editor TIWN
India's Economy : Time to say good-bye to all Govt. subsidies ?
PHOTO : Govt run Air India in the Pocket of Ministers, Politicians. (Cartoon source : Internet )

Even though Indian Economy and growing businesses are leaping forward in many areas across the world but Indian Govt is one amongst the few in world where Govt runs hundreds of businesses without any business acumens.

India also houses most number of sick Public Sector Units (PSUs) , or loss making Govt run corporations from Airlines to Phones to Hotels to even Television manufacturing where lakhs of crores accumulating losses incurred over years. All these Tax Payers money could be easily channeled into funding important projects across Country.

Two companies—BSNL and Air India—account for more than 60% of the Rs 20,000-crore loss showed by 71 PSUs in 2013-14.

All these sick PSUs employ lakhs and lakhs employees and backed by endless number of Unions where productivity and competition is considered the least priority.

From Congress to BJP, even Modi's progressive Govt never dare to take action on privatization of PSUs due to fear of vote bank loss from Lakhs of employees. 

Unlike its previous policy on disinvestment during its six-year regime beginning 1998, the 2014 poll manifesto of the BJP does not say anything about public-sector disinvestment or privatisation.

Central Govt doubled subsidies to 234 centrally run public sector units (PSUs) over three years to about Rs 1.73 lakh crore ($30 billion), but a new analysis of their finances indicates a 4% fall in profits at constant prices and—with inflation factored in—zero growth.

The subsidies are enough to fund the Mahatma Gandhi National Rural Employment Guarantee scheme (MGNREGA) for six financial years or pay for India’s defence purchases for three years.

A “close examination and churning” of these companies is necessary, as many of them have displayed “dismal performance,” said an annual survey released by the Department of Public Enterprise (DPE), pointing out a decline in various financial indicators. The survey helps government take policy decisions.

PSUs may sicken and lose out to private competitors, but they continue to be born—contrary to the general expectation that government should not be in businesses where existing private businesses are doing well: As many as 56 centrally run PSUs are being set up in different sectors, according to the survey.

Bharat Sanchar Nigam Limited (BSNL) has posted a loss for the fifth straight financial year.
 
BSNL lost Rs 3,785 crore during 2014-15, according to provisional data released by the government. The accumulated loss of BSNL has now swelled to about Rs 36,000 crore ($6 billion), with the company making losses since 2009-10.

Important Point is how long or precisely to what extent Govt can fund Rs 1.73 lakh crore ($30 billion) or more annual subsidy to all loss making Govt run companies ?

If  this Rs 1.73 lakh crore ($30 billion) annually is spent on education, poverty eradication, healthcare, developing infrastructure projects then India's rate of overall development would have been much faster.

Its hightime Govt should emulate lessons on EFFECTIVE GOVERNANCE from economically successful countries and get out of running loss incurring businesses.

Government's job is not running hundreds of loss making businesses like Air India or BSNL but staying focused on effective governance where country's basic necessities like Law & Order, Defence, Education,Foreign Relations, Healthcare are taken care of, also Govt should focus on making smart policies for Industry and Economic growth.

India's outdated model of excess subsidies on Govt run corporations is not helping Indian Economy.  

On top of that most of these PSUs, Govt busniesses are headed by Politically connected bureaucrats which are foremost reasons for PSU's economic failures. An IAS officer can never run companies successfully,simply because its not their field of expertise. Industry & Commerce need experts from business fields who can run successful businesses. A comparison between Govt run Air India and profit making Indigo Airlines probably will show the lapses in every steps Govt has taken.

Even though Finance Minister Arun Jaitley said that Govt considering privatization but vote bank politics will force toroll back these decisions.

"Certainly I would be interested to look at some PSUs (which) could do much better in private hands...Taxpayers cannot continue to pay for loss-making businesses," Mr Jaitley said at the India Economic Summit of the World Economic Forum in Delhi.

Saddest part is every rupee of tax collected from poor Indians and utilised to offset Air India's of BSNL's losses, for instance, is one rupee less on education or healthcare. All these loss making PSU executives enjoying company paid royal vacations, amenities like yesteryears Maharajas.

In 21st century's India, unfortunately country's majority of politicians, policy makers prefer to remain in earlier century.

As long as Vote bank politics reigns supreme over 'Economic Development', India's overall progress will be at snail's pace.

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