Why Indian PSUs dont succeed !

A PSU is a Public Sector Undertaking or a company promoted or majority held (51%+)  by the government using Taxpayers moneys.

Here is an interesting PSU Quiz that gives u a general Idea about PSUs.

Navratnas are the Creme de la Creme of Psus and are the list of the top 9 PSUs of the govt.

The main  defense for such poor performance is that  PSUs are for public service and not Profit. Is this the sole reason that private cos outperform them?

Sadly i think not

In comparison to the private sector, PSUs have failed to give a fair returns to minority shareholders even though they sometimes work as a Monopoly take for example our Oil PSU Navratnas like ONGC, HP, BP and IOC. When they are not monopoles they are failures and a constant drain on public funds ie  zombie companes take for example Air India

Read Turbulance in the Indian Aviation Sector.

The govt systematically skims profit in the name of subsidy burden and it is supposed to be fair just because it is in plain view.

Read ONGC falls after Goldman says govt took $20 billion

You can definitely blame India’s powerful bureaucracy, whose culture lacks accountability.You can also blame the method of selecting top  PSU managements, based on hierarchy and political connections, because most often then not PSU bosses come from unrelated fields and have no experience  on how to run that business, but then again are they really appointed to run firms efficiently or obey diktats and refurbish politicians houses one still cant really decide.

Dont forget that ex psu employees have played a vital part in the Laxmi Mittals success story . Read The Raja Of Steel

No wonder, Former PSU honchos lead the private sector

Political ego also plays a big hand … Subir Rahas ouster shows

To tell you the truth it all comes down to mismanagement and political interference, and a wanton disregard for  accountability of public funds to serve their own petty interest and  help/aid and benefit cronies and big business with deep vested interests.

The way the current UPA govt has been going about it, is simply ludicrous . No wonder frustrated shareholders have gone to court (never mind the brotherly spat and chote bhaiyas nudge)

Read Gas opera: NTPC shareholders file PIL

Also read :

Caught trying to pack oil PSUs with Cong men and women, Petro Ministry now fudges facts

No crony capitalism: Sitaram Yechury

SC issues notices in closure of vaccine producing PSUs case

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2 thoughts on “Why Indian PSUs dont succeed !

  1. I agree, these companies have always been the sacrificial goats of the government and pawns that the parties use to forward their agendas. I think Oil companies often complain and demand greater say in deciding prices, but often get strangulated by subsidies.

    //The way the current UPA govt has been going about it, is simply ludicrous.
    Do you want to elaborate on this? I didn’t know this govt is doing anything different. 🙂

  2. Priyank
    i was talking about the open loot and crony capitalism
    the way the oil minister is seen to be favoring bade bahiya disregarding losses to ntpc , how ongc was milked and psu oil cos were having problems borrowing for working capital thanks to the subsidy burden and forced acceptance of oil bonds

    There was an mp from the south party D** that openly favored a company in telecom licensees

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