Role of public enterprises, their present contribution, relevance and issues for their under performance

1. Dr. L. Mothilal, Pondicherry University, India, Jan-2016 – mothilal2020@gmail.com
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PUBLIC ENTERPRISES
The Concept & Meaning of Public Enterprise:
- The concept of PE is very vague and imprecise. There is no nationally or internationally
accepted definition of PE.
- There is no single correct way to measure the size of the public sector. Similarly,
definitions of public enterprise can vary between countries and change over time.
- A large no. of our Ordinance factories is not PEs, but Bharat Dynamics Ltd. (registered
under companies Act) at Hyderabad. (both are in same Industry)
- Similarly, Port Trusts are autonomous commercial bodies are not PEs but Airport
Authority of India. (both are in same Industry)
Definition of PE:
 Public Enterprise is an activity of business character, managed and owned, 51 % or
more by the Government – Centre, State or Local, providing goods/services for a price.
 Definition has two dimensions
i) Public Ownership

2. Dr. L. Mothilal, Pondicherry University, India, Jan-2016 – mothilal2020@gmail.com
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a. Major decisions with Govt.
b. Surplus to Govt.
c. Social Accountability
ii) Business Enterprise
 Types of Public Ownership:
A) Numerous Municipal Corporations undertake economic activity – water supply,
power, transport, etc. Are not PEs
B) Indirect ownership: If Govt. owns parent co. It will also own subsidiary co.
C) Ownership without Management:
D) Management without Ownership
 Synonyms of PE
a) Public Undertaking
b) Nationalized Industry in U.K.
c) Parastatal Sector in Latin America and Africa
d) State-owned-enterprise by World Bank & some authors
e) Public sector undertaking,
f) Government controlled enterprise
g) State economic enterprise
h) National company
Issues in Public Enterprises and Corrective action:
1. Leadership – heading any institution, Company or Dept.
a. Narrow minded approach
b. Irrelevant educational qualifications
c. Only top-down approach
d. No appropriate feedback from employees & customers
e. Highly unethical standards
f. Play-it-safe role (Standard Operating Procedures)
g. Cousins of Politicians
2. Structure of an organization:
a. Improper Vision & Mission
b. Unnecessary Hierarchies
c. Irresponsibility
3. Irrelevant Methods & Practices:
a. Preparation of unnecessary reports
b. Inappropriate use of Technology
c. Unnecessary Committees

3. Dr. L. Mothilal, Pondicherry University, India, Jan-2016 – mothilal2020@gmail.com
Page 3 of 3
4. Negligible role of Human Resource Department: In fact professional HR
department does not exist in most of the Government organization in India.
i. Irrelevant Recruitment System
ii. Lack of basic skills among employees
iii. Irrelevant/no training to employees
iv. No incentives to performers
v. Unethical standards in employee promotions & Salaries
vi. Headship is based on experience & not on knowledge & wisdom
vii. Religious practices at workplace
viii. No Punctuality in attending office work
ix. Vagueness in defining work norms, timings etc.
x. Lack of infrastructural facilities & supporting systems to employees &
customers
xi. Lack of appropriate work culture
xii. No uniformity of work culture, attitude & behavior of employees
5. Influence of political leaders
6. No proper coordinating agency
7. Huge cost of product/service for very poor quality
8. Management skills not applied in running an organization
9. Quantity orientation at the cost of quality
a. Name sake services at huge national cost
10. Construction of buildings:
i) Lack of scientific/future needs in designing
ii) Huge cost for very poor quality of work
iii) Inauguration of buildings at huge cost – This can be totally done away with
iv) Improper maintenance of buildings, equipment & facilities
v) Inappropriate application of environmental standards
vi) No parking facilities
References:
1. Laxmi Narain (2003), “Public Enterprise Management and Privatisation”, S. Chand,
New Delhi.
2. http://www.capdm.com/demos/gi/gi/GI0901.html, accessed Jan 24, 2010