The Kerala state government is planning a new version of the Swadeshi movement used by Gandhi to encourage people from using home made cotton, boycott British made products and improve economic conditions by making India self sufficient. The Kerala state is hoping to revive the fortunes of ailing and sick industries in the state by assured demand for their products.
The idea is to buy requirements of government departments, as well as for the Kerala State Electricity Board from these sick industries, creating demand for their products and reviving them. Great Plan? I think not....
Firstly, why weren't these sick companies getting orders in the first place, and what caused them to be sick? In public sector companies in the state, the sickness would be primarily due to inefficiencies in the functioning, causing their goods to be more expensive or of a lesser quality for the same price as offered by a competitive unit. So is the normal process of inviting tenders and giving the order to the offer with the lowest price also going to be changed? Else, how would these industries get any orders?
Believe it or not, the state public sector units now get a 10% price preference in material supply to the government. This means, that the government is going to waste that much more of the taxpayers money, subsidizing inefficiencies in other public sector companies. If this was only for a period of say a year, where the ailing companies could utilize the fresh orders to revive themselves with the increased cash flows, and become competitive at the end of it, the plan might still have made sense. However, in this case, what is basically going to happen is that the public sector companies will use the 10% cushion to remain complacent and uncompetitive.
With KSEB and other government departments purchasing from these companies, they are sure to get lower quality products for the same price or even higher prices, making the service possibly even worse in the long term. Unless of course, KSEB et al could anyway afford to pay 10% more for purchases, and they are like sitting on piles of cash. In this case too, they could have opted to buy better quality stuff, rather than just pay for someone else's inefficiencies.
Just because an idea was good at one point in history, it does not at all imply that you can mutilate the same idea and implement it in a totally different context and hope to get results.
The idea is to buy requirements of government departments, as well as for the Kerala State Electricity Board from these sick industries, creating demand for their products and reviving them. Great Plan? I think not....
Firstly, why weren't these sick companies getting orders in the first place, and what caused them to be sick? In public sector companies in the state, the sickness would be primarily due to inefficiencies in the functioning, causing their goods to be more expensive or of a lesser quality for the same price as offered by a competitive unit. So is the normal process of inviting tenders and giving the order to the offer with the lowest price also going to be changed? Else, how would these industries get any orders?
Believe it or not, the state public sector units now get a 10% price preference in material supply to the government. This means, that the government is going to waste that much more of the taxpayers money, subsidizing inefficiencies in other public sector companies. If this was only for a period of say a year, where the ailing companies could utilize the fresh orders to revive themselves with the increased cash flows, and become competitive at the end of it, the plan might still have made sense. However, in this case, what is basically going to happen is that the public sector companies will use the 10% cushion to remain complacent and uncompetitive.
With KSEB and other government departments purchasing from these companies, they are sure to get lower quality products for the same price or even higher prices, making the service possibly even worse in the long term. Unless of course, KSEB et al could anyway afford to pay 10% more for purchases, and they are like sitting on piles of cash. In this case too, they could have opted to buy better quality stuff, rather than just pay for someone else's inefficiencies.
Just because an idea was good at one point in history, it does not at all imply that you can mutilate the same idea and implement it in a totally different context and hope to get results.
1 comment:
I would blame all this on the general Indian resistance to change. As a government we simply refuse to take stock or how things have changed in the 50 years post independence and review our policies, reservation, rules and regulations accordingly. We choose to continue a pseudo-contented existence in some stone age.
I use the word "we" because although as citizens we complain about the state of affairs we do nothing much about it. It's not like we join politics and try to clean out the gutter. So we are in a way party to the inefficiences and complacency of our government. A very good example is how we allowed the government to simply cripple what could have been a very powerful Right to Information Act.
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