The government’s reported plan to shed its controlling stakes in 22 listed and unlisted companies is welcome. Simultaneously, the government should set up new enterprises to provide the economy with new competitive capacity that the private sector finds too risky or too complex to enter. This requires espousing a dynamic, not ideological, approach to the public sector. What qualifies as a strategic sector will vary with the maturity of the economy. At one point, private sector companies were too small to set up power plants or produce machine tools; so the state had to step in. That is not the case today. The state can exit many sectors in part or in full. But many emerging areas of advanced manufacturing, relating to robotics, artificial intelligence, equipment for high-speed communications, new materials, nanotechnology and new-generation drugs hardly have any Indian presence. Economic and national security calls for such presence, as Indian Space Research Organisation’s (ISRO) in space. Telecom networks are not mere commercial installations. They have a huge bearing on national security and are vulnerable to cyber warfare. There is no Indian company today among the ranks of large telecom equipment makers, none is a patch on Chinese giant Huawei. In all such sectors, the state needs to set up new enterprises with the right degree of capitalisation, clear goals and management structures that nourish initiative and creativity and, at the same time, detect and punish dysfunctionality. Such enterprises should have functional autonomy, come under commercial rather than CAG audit but be accountable to a parliamentary committee. Such new companies would also need huge manpower in R&D. These human resources would be their real capital. Talent will need to be compensated well. Knowledge workers need a work environment that is free from red tape and inspires everyone to bring out their best. Impossible? C-DoT used to be a pioneering public enterprise of this kind. Maruti, Bhel and NTPC were created and led as outstanding enterprises, albeit state-owned.
Source: http://blogs.economictimes.indiatimes.com/
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