Should The Public Sector Be Privatized?

Privatizing the public sector is definitely not a solution, to the existing problems. Instead what should be done is accountability of the people working in public sector should be increased. And the rules and regulation for carrying on the duties and executing things should be changes as per today’s needs and necessities. You cannot absolutely go on privatizing, each and every sector, and that is not also the solution to all the existing problems.

What is the need of the hour is accountability, of the people working in the public sector, they should feel that they are getting paid by the People, and they are responsible for carrying out their duties, for the welfare of the people. The feeling that they are superior to people, and people who come to them for help or for their services are, inferior or helpless, should be removed from the minds of the employees and officers working in the public sector.

Instead, they should feel that they are the servants of the public, every person working in the Government, for the Government, public sector, is a servant of the public. They may be an officer of a simple clerk, but they are there to render their services to the people. Every single person working in the public sector should be made to feel, that they are getting paid, money of the people, and they are working for the welfare of the people.

Each individual working in the public sector, should answer his own conscience. Is he doing a favor to the public by extending services, or is it his basic responsibility to do so. This sense of responsibility, and accountability, is what needs to be developed among the people working in public sector. If this is achieved there is no necessity for privatization.

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Public Sector Policy in India

The public sector has been central to India’s industrialization within the mixed framework. The industrial policy resolution in 1956 accorded a strategic role to public enterprises. Accordingly, areas of strategic importance and core sectors were exclusively reserved for public sector enterprises.

At centre and state levels, the public enterprises grew dominantly in terms of units and investments. Nationalized sick units accounted for one-third of the public enterprises in due course of time. A number of public enterprises had come up in non-strategic, non-core, consumer goods and services sector. By 1993, only about 60 per cent of total investment in public enterprises was in areas originally envisaged as the “commanding heights”.

Public sector would be confined to strategic, high tech industries and essential infrastructure. In 1992, the government established a Non-statutory National Renewal Fund to provide assistance to cover the cost of retraining and redeployment of labour and also provide compensation to labour affected by the closure of unviable public sector units, etc.,

Many public sector units were brought under the MoU (Memorandum of Understanding) system, which is a performance contract, a freely negotiated document between the Government and specific public enterprise.

MoU was started in 1987-88 with public enterprises, as of now more than 100 such units are covered by MoU. In 1995-96, financial performance was accorded 60 per cent weightage in MoUs. Many areas previously reserved for the public sector have been opened up to the private sector. Although its shares has declined in the past ten years, the public sector still accounts for 25 per cent of India’s GDP, 31 per cent of capital investment and 17 percent of the final consumption expenditure in the country.

At the start of the reforms 18 important industries including iron and steel, heavy plant and machinery, telecommunications and telecom equipment, mineral oils, mining of various ores, air transport services, and electricity generation and distribution, were reserved for public sector.

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