People's Democracy

Public Sector’s Performance Once 

Again Nails The Lie

 Dinesh Chandra

THE non-stop vilification campaign launched by votaries of the so-called “reforms” and the clouds of uncertainty hovering over its head notwithstanding, the public sector has again emerged as the star performer and proved the prophets of doom wrong.

Despite the constant bashing and allegations of inefficiency, mismanagement and unproductivity, the public sector has shown that it is alive to the nation’s expectations and committed to play, even in the most adverse circumstances, the role assigned to it.

The public sector workers and managers have achieved the feat despite the general demoralisation arising from the fear that there is no certainty as to when a public enterprise will be put on the chopping block to benefit the domestic or international private capital. The former have scaled new highs despite obstacles being created in their way to prevent them from competing with their rivals. An instance of it is the case of the Bharat Heavy Electricals Limited (BHEL).

The latest Public Enterprises Survey 2002-2003, conducted by the Department of Public Enterprises (DPE), reveals that the central public sector enterprises have declared a dividend of Rs 13,735 crore in 2002-03 as against Rs 8,068 crore in the previous fiscal (2001-02), an increase of 70.24 per cent. The dividend payout ratio has gone up to 42.73 per cent as against 31.06 per cent in the previous year.

The contribution to the central exchequer by way of excise and customs duties, corporate tax, interest on central government loans, dividend and other direct taxes has gone up by Rs 19,060 crore --- from Rs 62,866 crore in 2001-02 to Rs 81,926 crore in 2002-03, an increase of 30.32 per cent.

The central enterprises’ contribution to the central exchequer during the last three years – from 2000-01 to 2002-03 – comes to a staggering amount of Rs 2,05,829.40 crore. This far exceeded the cumulative central government investment of Rs 1,46,102 crore, by way of equity and loan, as on March 31, 2003.  It clearly demonstrates how imprudent it is to disinvest the government’s equity in public enterprises in order to bridge the fiscal deficit.

According to the survey, the net profit of public enterprises has increased to Rs 32,141 crore in the year – an increase of  23.72 per cent over Rs 25,978 in the previous year. Return on equity share capital (net profit to paid-up capital + share application) was 28.64 per cent for 2002-03, which means earning per share (EPS) was Rs 2.86 as against the EPS of Rs 2.45 in the previous year. Here, one share has been valued at Rs 10.

The public enterprises’ net profit before tax (PBT) rose to Rs 49,571 crore, compared to Rs 38,233 crore in 2001-02, registering an increase of 29.65 per cent. Profit before tax to net worth for the year worked out to 19.69 per cent, the survey says. Profit before interest, depreciation and tax has risen to Rs 1,00,918 crore in the year as against Rs 89,550 crore in the previous year, registering a growth of 12.69 per cent. The enterprises as a whole earned a return on investment (profit before interest and tax to capital employed) of 17.45 per cent.

In fact, since the introduction of the liberalisation process, the public enterprises have geared themselves to effectively meet the new challenges. This is evident from the survey that says the net profit of these enterprises has registered an increase of 607.17 per cent since 1993-94. The net profit has risen from Rs 4,545 crore a decade back to Rs 32,141 crore now. The return on investment has gone up to 17.45 per cent in 2002-03 as against 16.20 per cent last year and 11.6 per cent in 1993-94.

With the UPA government, in power, having committed to the Common Minimum Programme (CMP) which accords due importance to the public sector, it is hoped that the latter’s performance will further improve. As the director general of the SCOPE (Standing Conference of Public Enterprises), the apex body of public undertakings, Dr S M Dewan says, “The phase of policy uncertainty vis-à-vis the public sector enterprises has now been resolved in the best interests of the country.” He added that “the thrust now would be on increasing competition and monitoring monopoly situations that may restrict it.”

“With managerial autonomy and empowerment of boards, the public sector enterprises would be fully geared to face up to global competition and would emerge as strong global players,” Dewan says. (INN)