Late last week, at a function at Allahabad University, the chairman of the Prime Minister’s Economic Advisory Council commented that the public sector should improve its efficiency, which would enable the government to meet its social obligations. Leaving aside the debate on social obligations for now, the moot issue is whether the government is creating the right conditions for the sector to become more efficient.
Over and above the counterproductive trend of state interference in public sector enterprises, for instance, one basic constraint is the lack of managerial talent at the top and middle levels.
This constraint will only increasingly manifest itself as the competitive market takes away whatever talent that remains. Which is why we feel the need to highlight this again. As long as controls on remuneration stay, the right professionals won’t come in. Couple this with lack of freedom in decision-taking, the odds tilt towards status quo.