The story is not much different with most other barely functional public enterprises as these have only been siphoning off scarce resources from state coffers, without generating any returns. Records at the Ministry of Finance show that of the 36 public enterprises operating in the country, many are making losses, and the government has already funneled Rs 231.9 billion to them so far to cover those losses.
Given the inefficiency of the PEs and their inability to generate enough income to finance even their own basic operations, the government had long ago committed itself to dissolve and privatize them in line with the guiding principles of a liberal economic regime. However, the whole privatization drive soon lost momentum and reforms at the profitable units, to which a deep commitment had been made, also ended up in deep freeze. And in the post-conflict political transition the issue of PE reform and privatization has simply become derailed.
However, the liabilities the PEs generate continue to mount, exerting severe pressure on the fiscal front.
We believe the PAC initiative to dissolve some virtually dead PEs and overhaul others is a right move and we urge the government to go for it without further delay. We would however like to caution here that mere structural tinkering will not bolster the efficiency and capacity of the PEs. The government must also pledge them professional autonomy, freeing them completely from political interference and stopping the appointment of political cadres as top level managers or staff. The existing arrangement under which the different ministries oversee the operation of PEs must end.
There must be a separate body to oversee the operations of all PEs, to provide policy inputs, decide on recruitment and decide their overall fate. Such a body must itself be a professional one and have the autonomous authority to take appropriate decisions. This is crucial for freeing the PEs from political interference. We urge the government to take immediate steps to overhaul the whole mechanism that handles the PEs. PEs that can serve the people should remain. Otherwise, they must be dissolved.
The government’s focus should be toward prudently utilizing hard-won resources for development and for fulfilling people’s aspirations, instead of wasting them on inefficient PEs that serve nobody.
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