Privatizing public sector

February 27, 2018

Privatizing public sector

Apropos Akash Prakash’s thought-provoking piece “PNB and the public sector banks” (Business Standard, February 27), let us concede that in India, since Nehruvian days, when ‘public sector’ commanded some respect, there has been a sponsored lobby out to annihilate public sector undertakings by any means available. We have witnessed the fall of institutions like UTI.
 Methods used included creating legal hurdles in parity in functional matters with the private sector, ensuring weaknesses in top management by interference in top-level appointments and HR issues using Government’s ownership rights and sometimes by allowing infiltration of people of doubtful integrity at higher levels.
As regards banking in India, as the source of funds and the clientele served by the public sector and private sector banks are the same, there should not have been much difficulty in providing a level playing field for both categories of banks.
But, in reality,  we find only the private sector banks get full freedom to do business on their own terms (choice of clientele, freedom to operate where they want, no interference in HR-related matters including top-level remunerations and so on). Public sector banks are made answerable to their masters in Finance Ministry, accept responsibility for providing credit for all government-sponsored programmes and ensure G Secs are fully subscribed whenever central and state governments enter the market. Of course in making government borrowings successful they have other public sector organizations like LIC which are expected to support the government on an ongoing basis.
Privatization. Are we talking about handing over the banks to Mallyas and Modis who are running away with banks’ funds? Or are we aiming at professionalization of Indian Banking System, irrespective of ownership? These are choices to make fast. Time is running out.
M G Warrier, Mumbai


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