Private-Public dilemma

Almost each sector in the country today has government (read public) and private participation. You talk of the major sectors i.e. banking, telecom, mining, education, heavy industry, small industries, research & development, petroleum and mining, one would observe presence of govt. owned institutions and privately held institutions. In some like heavy industries, mining and education we had private and government (directly or through majority stake) players from long times while in some we just saw participation of private players in the last few years / decades.


Argument has always been that competition would always benefit the masses but overtime we have seen the following

a) Confusion has started creeping in after so many years of de-regulation. We have got plethora of examples. Private organisations in the name of competition have started violating the basic rules of the games across all industries in which they were earlier not present and were allowed recently. Be it mining, banking, insurance et al.. I need not give specific examples across any of these sectors. There was no necessity for positions like Ombudsmen in the bygone eras.

b) Salaries in the private sector are high but the attachment to one’s organisation is higher in the public sector organisations. No doubt there is a factor of safety and continuance in public sector organisation but higher salary in the private peers is increasingly touching enviable levels. There is rampant attrition amongst private institutions because of the mentality of employees for higher pay and better job environment. There is a also a flow of professionals from public sector institutions to private sector institutions in the same sector. Thus one sees there is sheer turbidity and dynamism because of these differentiations. The question arises is the customer really benefitted in this flux and changes.

c) We started with the notion that all that is private is competitive and better. A petty large and important industry today i.e. banking has seen a sleuth of good public sector banks having better balance sheets than private peers. There are certain public sector organisations like ISRO, DRDO and BARC which still attract better talent and also harness their talent. Engineers of these institutions are considered to be the very best; be it in any discipline of engineering.

d) Private players have a much shorter vision. We have examples of surprising measures being taken in the name of cost cutting by various private institutions, usage of physical network of BSNL by private telecos, advertisements of hospitals and education which were unknown hitherto, insurance is no more solicited (only) but sold and window dressings of many private banks being dissected by analysts.

e) With so many players in some sectors, excessive competition is distinctly visible in some sectors. Finance Ministry had to intervene to stop public sector banks from vying against each other in offering better FD rates to cash rich PSUs.

On a suggestive note, certain degree of maturity is required from each of the players in each of the sectors. Instead of targeting higher share of the pie, cant all players think of ways and means of increasing the size of the pie. Whats more worrisome is that with the existence of certain degree of dynamism in the system, the onslaught of reforms as slated and proposed by the government will further complicate the things. I am not a pessimist but as I mentioned, maturity is a rare commodity amongst thinkers and with a long term vision things can settle down for sure.