Is This a PPP Remodel

Context: Reformist decisions like privatization of commercial coal mining and Indian Railways network holds implications for other Public Sector Units(PSUs), the policy of divestment and economic efficiency.

Ailing Position of PSU’s

• Not able to survive genuine competition: They are not nimble enough to compete,  given that they are prisoners of process and hostage to the directions of their administrative ministry.

• Dependent on preferences and privilege: 

• Preference is given to profit-making PSUs through incentives and automatic nomination in project biddings
• Protection of non-profit making PSUs with massive subsidies.

Problems in Disinvestment Process

• Legacy of controversy attached to the sale of PSUs: hinders the execution of strategic divestment programme.

• Political opposition and employee agitation: make the process of disinvestment more complex.

• No sale of a state’s asset lest it attracts the ‘4 Cs’ — Comptroller and Au?di?tor General (CAG), Central Vigilance Commission (CVC), Central Bureau of Investigation (CBI) or the courts.

Way Forward

• ‘4Cs’ should be made aware.

• Speed up strategic divestment: in case if sick PSU’s as delay in divestment would reduce their valuation.
• Full autonomy to PSU’s: in the case where the government wants to give the PSUs a chance to stand up to the competition and a necessary condition for any kind of bailout packages.

Conclusion: If neither divestment nor autonomy accompanies the level playing field, almost all PSUs will die a natural death in the face of competition.