Public Investment: Interesting comparisons

Interesting comparison

This refers to Krishna Kant’s story “Large exposure to PSUs hurts LIC’s returns” (BusinessStandard, July 19). One wishes, all stakeholders join-in and debate the resources management by GOI, state governments, PSUs, Banks, both in public and private sectors and other organizations which source public savings for their funding/business needs.
It would be fallacious to compare every investment with the equity investment in ‘Sensex’ shares. But there is a case for a reasonable positive return on investment of funds raised from the public, for the absence of which, there may be diverse reasons. The absence of functional freedom to work within the contours of mandated responsibilities stands in the way of professional funds management by statutory bodies and PSUs including PSBs.
For historical reasons, despite talk about non-interference in the internal affairs of statutory bodies and PSUs, GOI has retained ‘ownership rights’ over these institutions and ensured amenability of management, irrespective of changes in governments in Delhi. Right from board level appointments to the payment of remunerations/providing incentives to the junior-most employee in the smallest PSU, GOI directly or indirectly keeps a rein. These directly impact investment decisions like the one by LIC now being focused.
This leads to the issue of transparency in the directed deployment of resources. When comparisons are “Marked-to-Market” as in this article, governments too need to move away from dependence on captive pools like SLR funds, funds with LIC, Pension Fund with NPS administrators etc for market borrowings. Also, for public investments in GOI Savings Schemes like EPF, PPF, and G-Secs, interests should be made market-related. Maybe, where income patterns need to be protected as in the case of deposits by elders out of retirement corpus, there should be independent transparent arrangements.

M G Warrier, Mumbai


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