Performance of public sector enterprises, Microeconomics

Performance of Public Sector Enterprises:

Data reveal that the performance of the much-maligned public enterprises has shown a distinct improvement during the last 9 years. Gross profit as a per centage of capital employed was 11.61 per cent in 1993-94, it improved to 15.88 per cent in 1995 and further improved to 17.5 per cent in 2002-03. Similar trend was noticed in net profit which improved from 2.84 per cent in 1993-94 to 7.7 per cent in 2003-04. This indicates an improvement in the performance of Central Government Enterprises. The question that becomes relevant is: Is it, therefore, desirable to undertake disinvestment of CPSUs? The answer on all practical considerations is clearly in the negative. It would be far more rewarding if the Government gave them greater autonomy to undertake business decisions. By 2002-03, a total 100 PSUs signed Memorandum of Understanding (MOUs). A review of performance reveals that out of 100 enterprises, 45 were rated as excellent, 19 very good and 14 as good. If 78 enterprises out of a total of 100 have shown an improvement in performance, then it becomes evident that it is more desirable to innovate measures to improve their performance, rather than weaken them by undertaking disinvestment.

 

Posted Date: 11/15/2012 2:39:27 AM | Location : United States







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