Government – the Union for common man …

“Ministry of Finance, Government of India is planning to reduce the fiscal deficit, at any cost, to avoid any downgrade in the investment rating for India”

This topic and associated discussions and articles have caught the main headlines of our media in the recent past and I guess we will continue to read more and more about it as India wants to attract considerable amount of foreign investments in near future. Towards this very attempt to bridge the fiscal deficit, GoI has set its revised target for 2013 PSU divestment and it is estimated to be in the range of around 25,000 crore to 28,000 crore. However a later press article revealed the FinMin move to allow LIC (Life Insurance Corporation of India) and PSU Banks to buy a considerable chunk of this divestment stake. This seriously raises a question about the credibility of those divestments and the efficiency of the PSU enterprises targeted for divestment. Had the PSU enterprises been running efficiently, the market itself would have valued the divestment and government would have earned its target without any hassle of pushing LIC or other PSU enterprises to make this divestment a success. But here because of the inefficiency of the PSU firms, the market is not responding positively to the divestment offers and hence GoI is using its cash rich enterprises to make the much hyped move – a success. This raises a question in my mind as to why the money meant for life insurance purpose is invested into the inefficient businesses run by the Government. Why is it that the market is not investing (or trusting) in the PSU enterprises as much as in the private entities? Ultimately what is the business of our government and ideally what its business should be? Is it the business of a government to be in a business?

LIC to GOIs rescue

Source: Economic Times

Is Government of India supposed to be running business for which it doesn’t have the skills/resources and then waste the precious resources of the country? This includes instances like re-routing LIC cash pile into the PSU divestments, putting more and more money periodically into the same loss making units without any attempt to revive and make these public enterprises self-sufficient. Is Government expected to tweak the laws and regulations to achieve its business motives without forecasting the holistic picture of the future Indian economy – like overriding IRDA norms to allow LIC to invest in more equity portfolios and hence make its PSU divestment a success? Ultimately, is all this going to help the common man – whom the Government is supposed to represent? In a country like India, where every citizen is member of multiple unions and unions keep hijacking the ministry for the good of a specific section rather than the overall prosperity of the country – Government is supposed to be the union for common man, who unfortunately cannot claim his rights in this power struggle. If Government is not up for this, then who will protect the rights and resources of the ‘aam aadmi’, if not who will govern the processes of the country on behalf of its people?

Yes, it is the GOVERNANCE that the government is supposed to take care of and not running businesses which other players can handle better. Be it the public sector banks, telecommunication firms, transport businesses – there are ample evidences to show that non-governmental entities are able to run these businesses better and generate more employment, revenue and boost the economy. This is because the decisions of these non-governmental entities are driven by mantras of efficiency and profit making which will ultimately drive good customer satisfaction, i.e., the satisfaction of common man. The inability of the non-governmental agencies to tax people as and when they like, tweak laws to cover their inefficiency and exist for years without making profits – drive the private entities to perform at its level best.

GoI should ideally take ‘governance’ as its core focus, strengthen its civil servants on diverse aspects of governance and divest all the other businesses that it has ventured into, if those could be better run by others. Basic fact of the matter is that nobody wants government to run a business that another institution can run better. But since profit making alone should not be the sole aim of enterprises, Government must set up proper governance mechanism to ensure that all the enterprises in the country function towards the common goal of the country and don’t go against social well-being. Such a setup where the business is run by private entity with best possible operational efficiency and social justice ensured by government will be equivalent to a blue chip PSU enterprise. Of course this doesn’t apply to the critical government functions such as defence, basic health care and so on. Such an efficient firm will empower all the associated stakeholders and leads to minimum resource wastage, maximum operational efficiency and generates profit and employment side by side. This move will also become a solution to some of the troubling problems in India like brain drain to the west, slow rate of development, unemployment etc …

The numerous inefficiencies pointed out here are the hard realities that we face every day in spite of the stringent audit and review standards set by the Government. Somehow the people in civil servant roles and governmental functions become inefficient in the public sector domain. I won’t be surprised to hear that the public sector is like a machine which can take in the best brains of the country and convert them to inefficient robots. The underlying cause is that it is the exchequer’s money that’s going down the bin and Government has numerous ways to fill its treasury again and again irrespective of how inefficient it is.

Government is to people what Mukesh Ambani is to Reliance Industries. I meant, government is supposed to guide and empower its people with the available resources and lift the living standards of its people. Somehow the power of government to tax people, pass laws and control police has given rise to a governance structure of at most inefficiency. Why our government is not able to instill the ownership of the nation in its civil servants? Why is it that every civil servant in the country gets a “corrupt” badge even if he is good at his job? Why talented & skilled people from India fly over to foreign destinations in order to fulfill their ambitions? Why should the government run Indian railways if it can’t run it profitably and provide facilities for its people. Give it to a private player and ensure social well-being by setting governance standards on the concessions to be given for the eligible section, frequency of trains and so on.

Let our country not become a place where everyone except the common man has a union for raising their needs. Government is the union for common man and it should stand for its people. The day we realize that, the day when our voters take this as basis for electing their representative and the day when the government stands up for this – is the day when India will speed along the tracks of growth and prosperity.


3 thoughts on “Government – the Union for common man …

  1. Friends, This write up is not pro-privatisation. Its just a thought that if Govt. gives up businesses (which could be run better by others) then it can utilize the bandwidth for more important things that it is meant for …


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