Are Public Enterprises a Viable Option?
“Past experiences are evidence that public enterprises have failed to earn a just return as far as money is concerned. ”
It has been seen time and again that the projects that are entrusted to public enterprises take a lot of time for completion and also suffer from one or the other problems. So, what’s the reason behind all this? Let’s try to explore the causes.
The glitches may be due to non-release of finances in good time. This delay shoots up cost estimates and difficulties arise in the completion of projects undertaken by these units.
The profits expected from such units also get deferred and this disturbs a range of calculations on demand and supply side. Public enterprises are many a time set up on political concerns. There are no definite aims and objectives to be formed and the whole thing is done in a state of urgency.
The schemes are not suitably assessed on sound business doctrines. Defective appraisal of projects results in their collapse. Public enterprises pay out weighty amounts on fruitless expenses. Large amount of money is first spent on providing accommodation facilities and other conveniences to employees even before the unit begins its desired work.
This takes away a huge portion of investments and projects experience great pecuniary troubles. No doubt, such investments are valuable for the employees but there should be some thought put into the profit that is to be earned by these public enterprises. Past experiences are evidence that public enterprises have failed to earn a just return as far as money is concerned.
There is regular meddling from politicians’ side in these units. The members of the party in control attempt to manipulate the strategies of public units. Those who have no business knowledge but only have political hold take up the vital posts. Such leaders are not able to motivate and stimulate workers in improving their performance.
Public sector units provide work for persons disproportionate to their needs. The jobs are produced to accomplish employment targets of the government and not as per the requirements of business. These units face a lot more labor related problems as compared to private sector business units.
Another reason for malfunctioning of public units is the puffed-up expectation of workforce from government run units. Actually, in a democracy public property is considered to be everybody’s property. So, employees often resort to massive strikes for the realization of their demands without thinking about the effect that their actions would have on people and the nation as a whole.
Author - DeeKay
Tags - Finance, Economy
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