Battling the Covid Crisis — can the Public Sector play a meaningful role?
It has become fashionable in recent times to be critical of the Public Sector and to ignore its contributions to the Indian economy and society. There are many votaries of the view that even in these difficult times Government should not increase public sector expansion as it has limited growth benefits and leaves little scope for private sector investment. It is futile to get into the public versus private sector debate in the present situation where urgent measures are needed to shore up the economy. The Gross fixed capital formation figures(series 2011–12) of the National Statistics Organisation show that the contribution of the public sector has been much larger as compared to the private sector if we take into account their relative share in the Indian economy. There are multiple problems like non performing loans of banks, real effective exchange rates etc and not crowding out by public sector alone which have proved detrimental to private investment. It is necessary to boost public investment in the infrastructure sector and in those sectors where it is not in competition with the private sector urgently. In any case, the present scenario necessitates a much larger role for, the public sector on many grounds.
One of the major criticisms of the series of recent revival packages announced by govt has been that they focus on increasing liquidity rather than creating demand.The public sector can play a crucial role in demand creation particularly by supporting the MSME sector.Govt has already mandated that at least 25% of their requirements have to be procured from these units. The present situation calls for a more concerted effort to increase this percentage to the extent possibly keeping in mind the individual needs of different sectors. At any given time the public sector enterprises,railways and defence have huge pending dues of these units. As an immediate relief measure up to 75% of their dues must be paid by giving the required one time relaxation in procedures.The disputed payments can be deferred and dealt with separately.This will put cash in the hands of entrepreneurs and help them to start operations to tide over the difficult period.
In line with the national goal of promoting the MSME sector large public sector companies have been promoting ancillary units. A good example is the dept of Defence Production which has created two industrial corridors in the north and south to promote scores of small ancillary units which supply goods to defence PSUs. The northern corridor includes cities of Aligarh, Kanpur, Lucknow and Varanasi while the southern corridor is based in Tamil Nadu.Such efforts are being made by numerous public sector enterprises and they not only promote the MSME sector but also help the country in realising its goal of self reliance and make in India.
Employment generation is another need of the hour. Direct employment generation through the public sector has been steadily falling over the past few years.This is as per govt policy of disinvestment and right sizing the bloated public sector. However the public sector enterprises still play a crucial role in indirect employment generation through greater ancillaristion. These efforts also need to be further strenthened. The Dept of Defence Production alone has the goal of providing employment to around 20 to 30 lakh people by the year 2022.
Public sector enterprises are also playing a crucial role in promoting skill development. These efforts of skilling and reskilling need to be further scaled up in the present scenario to encourage self employment
Coming to the immediate migrant labour crisis,the public sector units particularly in the power, oil, coal and steel sector can play a critical role.These companies have units all over the country in the remotest and poorest areas.We need to coordinate their efforts to provide for the basic needs of the migrant labour. This could be in the form of setting up quarantine and shelter homes,providing rations,transport or medical facilities to the needy.
These efforts need to be coordinated with the railways and state governments. The expenditure can be met through the CSR contribution of these companies and government will be spared additional financial burden.These difficult times are a test of the true mettle of our public sector companies as they have always come forward to support the govt in crisis situations.The private sector has made large contributions to PM Cares Fund but it has neither the reach nor mandate to work in tandem with govt in providing immediate relief to the needy in such trying times.
Sadly it seems that the tremendous potential of our public sector enterprises in helping to combat this crisis has been largely ignored even though many of them like the Railways and Air India have been at the forefront of our efforts to combat this unprecedented pandemic.Perhaps we need to look at our public sector enterprises through a new prism which acknowledges their positive contributions and devise strategies to restructure them so as to enable them to make a greater contribution towards nation building.
