Rare example

The Food Corporation of India (FCI) may not be a worthy representation of an efficient public sector unit (PSU), but it has managed to do something that many other government-run entities need to emulate.

It has trimmed its workforce by nearly 10,000 in the past six months by floating a voluntary retirement scheme. Those who have left include as many as 7,000 officers and other white-collar staff.

What is also noteworthy is that it has, at the same time, abolished all the posts held by the exiting employees. This demonstrates a rare zeal for administrative reform and for making the organisation more efficient.

Equally, it indicates how over-staffed this enterprise was. The FCI management seems confident that downsizing will lead to improved efficiency, besides saving on costs.

This is because the downsizing exercise ran parallel to the computerisation of its operations.

As FCI sources aptly put it, "the mouse is eliminating the rat"! The corporation has taken numerous other steps as well to cut costs and improve efficiency, but their impact will not be as immediate or as enduring as that from shedding flab.

We need more FCI kind of changes. But all too often, what the country sees is the exact opposite.

The latest example of certain waste is the proposal mooted to pump fresh investment of Rs 195 crore into the chronically sick Hindustan Cables Limited in the name of yet another revival package.

The company has been in the red since 1995 and its plants have been idle since last year. What is more, it has already absorbed funds and other assistance worth Rs 820 crore since the early 1990s, without anything to show for it other than wasted capital.

This aside, the experts' report that has mooted the idea of fresh capital induction has itself pointed out that high overhead costs and generous employee benefits, resulting in non-competitive prices for its products, were among the major causes of the company's sickness""and it is not clear what will be done to address these.

Unplanned and irregular investments in capacity addition have been another problem. This looks suspiciously like throwing good money after bad, in the name of revival schemes.

Rightsizing companies has formed part of the corporate world's survival and growth strategies the world over.

Though most public enterprises have been reluctant to tread this path, the private sector has been doing what is needed, especially since the advent of the information technology revolution in the 1980s. Traditional bureaucratic structures have progressively given way to flattened organisations with fewer workers and even fewer managers, and of course more outsourcing.

But there are all too few public enterprises that feel the pressures of this more competitive world, primarily because successive governments have been willing to bail them out with more money.

Though the UPA government's crucial dependence on the Left parties is bound to act as speed-breaker, this should not be allowed to come in the way of the needed reform, so that more public money is not wasted on unlikely "revival" packages of half-dead companies.