Impact of Privatisation of PSU on GATE Aspirants? Is PSU Privatisation Good or Bad?

What is PSU?

An organisation which is owned by the Indian government is called Public Sector Undertaking, PSU. In India by the end of march 2021 there are a total of 365 Public Sector Undertaking Enterprises are existing. In PSU the company equity of 51% or more is owned by the central government or the state government.

What is Privatisation?

Privatisation is the process of transferring the government owned property to private hands. Recently the Finance Minister made an announcement about Private Sector Undertaking while announcing the budget 2021-22 in the light of Covid-19 impact on businesses and Governance on Public Sector Undertakings. India's PSU sector will be privatised, but except 4 organisations in strategic sectors.

Once the government announced about the Privatisation the nation went into shock. With this announcement the government declared that all the PSU’s under the non-strategic sector will get privatised while in the strategic sector fully owned by the Government.

Government turned up this PSU Privatisation idea because some of the PSU’s are in financial losses and brought about an average loss worth 50% or a greater compared to their normal net worth during the past four financial years. So, the Indian Government is thinking of being privatised rather than strategically closing.

Impact of Privatisation

Privatisation was first encountered by world nations in the start of the great recession. India acknowledged and began thinking about it when the financial conditions of the government authority became worse.

Privatisation is additionally called Commercialization as the idea directly demonstrates commercialising goods and products. Privatisation is an economic process that hits the socio-economic development of a country. It allows organisations to focus on acquiring profits which thus makes the nation excel financially .

A few Public Sector Undertaking recruitment under the aegis of Government of India consistently come up with huge employment opportunities for various management and technical students every year.

Every year over 8 lakh students take the GATE exam out of which only 10,000 students enrol themselves at IITs for the M.Tech or PhD courses. The rest of students search for the opportunities in the PSU sector laid out by the Government. The job security that offers stability makes PSUs so appealing for students with the tag of being a 'white-collared’ job. Also, now-a-days IITs are struggling to hold their post graduate students, with many dropping out of the course subsequently to find a job in the Public Sector Undertaking recruitment. It has been informed that out of 8,000 students, 2,000 are leaving the course in the middle to land a job in the PSU sector.

GATE aspirants are getting confused with the current announcement of PSU Privatisation still in the opinion that getting a job in PSUs is considerably more valuable and can settle in life than choosing higher studies. "Typically, there is a lot of pressure to get a job after graduating. Not every person will have a 8 point CGPA with the best package soon after graduation. The GATEaspirants will get a choice of selecting either M.tech or a Job. A job in a PSU is most certainly a better choice. However, with the PSUs getting privatised will create a gap and impact the GATE aspirants.

If the Privatisation of PSU takes place then it means the government will have 40% or less than stakes in the companies. This means the Privatisation will give a choice to the company to revive itself and steer towards profit making. If a company is completely taken over by a new management then it usually begins the process of restructuring. This restructuring will also happen in the Public Sector Undertaking recruitment. Recruitment policy will be entirely taken care of by the management of that company and affects the GATE aspirants.

The immediate effects of Privatisation of PSU are mass lay-offs. if the situation goes out of control or some voluntary retirement applications are accepted by the employees which can create a fear in the GATE aspirants while looking to work in PSU. This impact of Privatisation leads to a dependence on the performance unlike in a PSU like a corporate job.

Is PSU Privatisation Good or Bad?

Privatisation besides has huge disadvantages for a country. Because of the initiation of this idea, the huge adverse consequences led to losing transparency. Privately owned companies undoubtedly do not let people know about their operations. Due to this there are unexpected price hikes. Private sector organisations mainly focus on gaining profits. Privatisation along these leads the way to dropping quality levels in the products.

Public Sector Undertakings were mainly created for non-financial objectives and are registered under Section 8 of Companies Act, 2013. With the competition and time, Profit making turned into an extensive objective for these organisations. Damaged by high competition around the world, economic reforms and responsibility, large numbers of these organisations began running out of projects and subsequently their profits were grounded. There was an emergency like situation Govt. implanted funds to make them alive. Some are being restored yet those which are unequipped for recovery are being sold off to the private sector being turned as Privatisation.

Many of the GATE aspirant’s dream is to get job opportunities in PSUs and some of the most common companies recruit through GATE are- ONGC, IOCL, OIL INDIA LIMITED, BPCL, etc. The impact of Privatisation then more on students especially who are looking into Public Sector Undertaking recruitment.

Public Sector Undertakings in India prefer to import technology from foreign economies since it is more affordable to import technology , as opposed to developing in India from the scratch, they foster technologies in-house from the beginning. The technology created in scant economies is capital concentrated essentially on the grounds that these nations don't have the sort of work force we have. So, they import and reduce the workforce in the PSU sector which eventually leads to fewer jobs."

Ideas about impact of privatisation

The impact of Privatisation of the PSUs would help to clear off the bad debts of some organisations and the government. But most of the people think that it would sell its stakes in the smaller Public Sector Undertakings and keep the larger PSU’s aside.

Providing employment was also one of the objectives, though not the important one. Nevertheless, in the years that followed, several PSUs became white elephants serving neither a social or economic cause.

As GATE aspirants and as students we realise the impact of Privatisation as one side of the coin and coming to the other side of the coin knows only too well that its success depends on the transparency of the process and the success of the regulators. While welcoming the private sector, governments should make sure a level playing-field with well-defined rules. The role of productive and liberated regulators with statutory power should be well-defined. The country needs to know the strategy and standard for PSU Privatisation. Driving every public sector employee into the slope of vulnerability cannot cause the best results.

This new privatisation policy has led to an insecurity among the employees working with psu's and the students looking for jobs in psu's. Let's wait for the further update and see if this new privatisation scheme turns out to be a boon for the sinking economy of India.

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