How would you feel if you had not received a single increment to your salary for more than 20 years? Probably like the hero in the old Ajit joke (for those who may not be aware, Ajit was an actor who played the role of villain in Hindi potboilers in the 1960s and ‘70s, whose trademark dialogue delivery style won him cult status among fans and spawned innumerable jokes) which goes like this: Ajit’s sidekick Robert drags in the hero bound hand and foot and asks him, Baas, iske saath kya kiya jaye? (What shall we do with him?).

Ajit, in his trademark drawl, replies, Isko liquid oxygen mein phenk do. Liquid use jeene nahin degi, aur oxygen use marne nahin degi! (Throw him in liquid oxygen. The liquid won’t let him live, and the oxygen won’t let him die!).

That’s the fate thousands of workers and staff in many of India’s chronically sick and loss-making public sector undertakings (PSUs) are facing today. The government, for reasons best known to itself, is either unwilling or unable to let them (PSUs) ‘die’ a natural death. And the mountain of losses, archaic and outdated products and technologies, and their inability to undertake any kind of investments means that these PSUs are simply unable to compete in the marketplace and ‘live’ as viable entities.

In many cases, this is nothing less than a living death for India’s forgotten PSUs. And not just the organisations themselves, but the thousands of workers and staff employed by them.

Time’s ticking away

HMT Ltd, the watches to machine tools to tractors conglomerate, one of what Jawaharlal Nehru described as “temples of modern India”, is a classic case in point. Once upon a time, HMT was one of the so called ‘crown jewels’ of India’s portfolio of state-owned businesses.

Originally incorporated in 1953 to produce machine tools, during the glory days of planned development and public sector enterprise, it kept growing — and diversifying. Watches, lamps, tractors, printing machines, die casting, dairy machinery, presses and press brakes, plastic injection moulding machines, horological machinery, food processing machinery, miniature batteries for watches — the list was bewildering.

And the products sold like hot cakes. Its tractors helped power the green revolution. Its dairy machinery laid the foundation stone for the ‘white revolution’ in milk. Its sturdy, hand-wound watches were a mandatory wedding gift to newly-weds. Its fine bearings had a waiting list of buyers.

But that was then. At that time, before reforms unleashed a storm which HMT’s aging ship simply could not navigate, some of the best and brightest engineers queued up for a chance to work in one of HMT’s sprawling factories scattered across the country, from Bangalore to Hyderabad to Pinjore.

Doomed since 1992

The year 1991, just before the balance of payments crisis forced the country to bury its socialist past and steer a radically different course, was probably a good year to be working in HMT. Petrol used to cost just Rs 14 a litre then, and it was possible to buy good rice, of the unsubsidised variety, for around Rs 5 a kilo.

But thousands of executive grade employees of HMT Ltd have been stuck with salaries that have been unchanged since 1992. When you look at the bigger numbers, even that doesn’t seem so bad. After all, HMT has been making losses since 1991, after reforms unleashed both domestic and international competition on this unprepared state-owned undertaking, overnight whisking away the market for its Soviet era tractors and its antiquated, analogue-era watches.

One is pretty certain that no privately-owned enterprise will be able to challenge HMT’s record of notching up losses for two decades, for the simple reason that such a company would have been wound up long before the losing streak stretched to over 20 years. So on that count, one could argue that HMT’s employees are actually lucky. Instead of being jobless, which is what they would have been if they had been in the private sector, they continue to have a ‘secure’ job, with benefits. A little thing like not getting a pay hike for two decades would not matter so much, one could argue.

But that would be doing the HMT engineers a grave injustice. As the debate over euthanasia so dramatically illustrates, many sufferers of chronic and incurable maladies prefer a quick and painless death compared with a lingering and excruciatingly painful one. These officers (the factory workers, incidentally, are not affected, since they are covered by a different, index-linked wage award which has taken care of inflation) have been frozen in time since their last pay revision in 1992.

Today, an engineer or an officer grade employee draws only a fifth of his or her equivalent grade employee in any other central PSU. The current pay scales of HMT executives are equivalent to that of a bench clerk in the central government. At around Rs 35,000, the salary of a General Manager level officer in HMT is roughly the same as that of a senior workman on the HMT shop floor!

Some time back, the HMT Officers Association had sent yet another delegation to Delhi, to plead with the government for revised pay, or failing that, at least a golden handshake, as recommended in the Justice Jagannath Rao Committee on pay revisions for PSUs and let them go into a marginally more secure retirement.

The government has been silent on this so far, as indeed it has been largely silent on the fate and future of many other moribund state-owned undertakings such as HMT. This is understandable, since the government simply does not have the money to either pay up and shut these entities down, or pump in enough cash to revive them to market competition levels.

Cost of neglect in crores

There is little composite data available, but according to an analysis by IndiaSpend, the government has at the moment over Rs 20,000 crore committed to various rehabilitation packages in various stages of implementation.

Then there are the past losses. As on March 31, 2011, according to data compiled by IndiaSpend, there were 406 PSUs, out of which 378 PSUs were in operation with a government equity investment of Rs 1,88,661 crore. Out of 406 PSUs, 251 earned a net profit of Rs 1,27,141 crore and 127 PSUs reported a loss of Rs 23,264 crore. Over 75 of these PSUs are legally sick (under the BIFR definition). The accumulated loss of these PSUs is reportedly over Rs 1.80 lakh crore.

This is a staggering cost to pay for neglect and indecisiveness. In PSU after PSU, the story is similar. What starts as a small problem escalates in the absence of managerial leadership, the lack of decisions from the all-powerful parent ministries, and the lack of professionalism at the top in most PSUs, treated as no more than a comfortable parking slot for bureaucrats and politicians, which led to either the right decisions not being taken at all, or taken too late to be of any use.

Like the revival packages, for example, which remain largely on paper (HMT’s, for instance, is stuck since 2004). The price for all this ineptitude and inaction is eventually paid by the tax payer and, in cases like HMT, by the employees.

It’s time the government stopped dithering on this issue. Sell off the PSUs if you must, revive them if you can or, failing both, at least shut them down. Killing them by neglect is worse.

Raghavan.s@thehindu.co.in and blfeedback@thehindu.co.in

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