Coexistence, synchronization of both public and private sector is the need of the hour for effective delivery of public service. Analyse (200 Words)
Refer - Business Standard
Enrich the answer from other sources, if the question demands.
IAS Parliament 5 years
KEY POINTS
· The most immediate problem of governance is the management of populism. Given the highly competitive nature of electoral politics, central and state governments will focus more and more public spending on the delivery of immediate benefits to voters at highly subsidised rates.
· Good governance requires that there should be a transparent process to distinguish between good and bad freebies.
· Perhaps an organisation like the Niti Aayog should take the lead in spelling out this agenda of institutional reform.
The reform is needed at both ends —the government and the corporate sector. The agenda at the government end is three-fold:
· Convert public sector commercial enterprises, particularly the financial institutions, into autonomous entities free of political interference and subject to the judgements of the capital market.
· Make allocations of government controlled land and other natural resources through a transparent process like an auction, for instance.
· Strengthen the laws that govern competition and regulation of natural monopolies and prohibit political involvement in individual cases.
· The corporate sector in India still reflects the organisational inheritance of the old managing agency system. Business houses grow by horizontal diversification rather than by vertical integration of globalisation.
· Even a new post managing agency player has diversified from petrochemicals to telecommunications, retail trade and mass media. In this structure, corporate strategy reflects a group interest rather than the interest of the specific firm.
· Fortunately, such conglomerates are now being challenged by independent companies operating on a large scale in areas such as banking, information technology, pharmaceuticals, biotechnology, e-commerce and automobiles — all of them incidentally areas which have done well in the post-liberalisation era. That is what we need and the big question is how that can happen.
· A part of the answer lies in strengthening company law provisions on cross holdings and other commercial arrangements between companies within the conglomerates
· But the biggest impact can come from large institutional shareholders who can enforce a degree of accountability on corporate management. Companies may continue to be run by promoted managers. That is not the problem. The real need is to liberate companies from the group interests of conglomerates.
