Strategic Management: Public Sector Undertakings

The COVID-19 pandemic has forced multiple changes on us and as we slowly try to work our way back to normalcy the government will need to make certain difficult decisions regarding the public sector. The functioning and ownership of the public sector and public assets is a difficult issue, both in terms of policy planning and public perception.

The public sector is a policy paradox as the utilisation of this sector and its resources vary greatly depending on economic circumstances beyond the control of the national government. Additionally, the efficient management of this sector is essential for any regime to maintain a positive public perception as jobs in this sector are highly coveted by the general population.

The direction of the public sector in India post the 1991 policy changes can at best be defined as tentative. Consecutive regimes have oscillated between privatisation and economic efficacy and maintaining the sanctity of the public sector. A major problem has been that the main job opportunities created by new investments have not been comparable to the benefits provided by public sector jobs. Hence, both public and political opinions on the public private debate have been extremely polarised.

One public sector industry that has been caught in the middle of this debate is the Indian Railways. The Indian Railways has always been a controversial sector in contemporary political memory. The railway ministry became one of the most coveted and politically relevant ministries during the coalition era of politics with multiple regional stalwarts holding the ministry and using it to grow their influences over their regional strongholds.

Here the demands and the needs of specific regional politicians took primacy over economic efficacy which has hurt the industry. For example, the CAG recently criticised the ministry over multiple projects going over budget, projects that had been initiated by previous regimes.

During the peak of the COVID-19 pandemic, the ministry was forced to initiate multiple cost-cutting measures. As Covid has slowly receded many have demanded that the ministry do away with these measures and reintroduce pre-Covid subsidies. While this may seem like a positive step, the present regime must carefully consider how these subsidies are reintroduced. This may lead to the curtailment of various popular subsidies but it may be an inevitable step needed to avoid any long-term disaster.

Simultaneously the regime also needs to ensure that subsidies related to senior citizens, differently-abled persons, women and other marginalised groups are upheld and continued as these are necessary for ensuring that such sections of people get full benefits available. The questions related to the public sector and subsidies will forever be polarised in Indian politics but any resolution to these will depend not only on political will but also, on a nuanced understanding of the Indian economy and the needs of sections that may not be the most visible in the contemporary political milieu.