SAMPLE ASSIGNMENT JAN JUNE 2016

Course Code MS - 92 Course Title Management of Public Enterprises Assignment Code MS-92/TMA/SEM - I/2016 Assignment Coverage All Blocks

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School of Management Studies

INDIRA GANDHI NATIONAL OPEN UNIVERSITY

MAIDAN GARHI, NEW DELHI – 110 068

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1. “The development of public sector in India can be divided in three phases.” Briefly discuss. The public sector is usually -------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------- where you live. Privacy

legislation usually calls organizations in the public sector a public body or a public authority.

Some examples --------------------------------------------------------------------------------------- prison services, and local and

central government bodies and their departments.

In countries like ---------------------------------------------------------------- as an economic strategy adopted for accelerated and

equitable economic development. -------------------------------------------------- from start of the First Plan (1951-56) to the end

---------------------------), progressively large investments ----------------------------------------. The strategy led to defining and

redefining the role of the state in national development.

India is a ---------------------------------------------- covering over 3.29 mn sqkm, ---------------------------------------, with density variance ranging from a ----------------------------------------------------------------------------------------------------. The level of economic and ----------------------------------------------------------------------------------------- are marked in all economic parameters and ---------------------------------------------------------- sector engaged in the task of accelerated economic development involving ------------------------------------------------------------------------------------ forms and -------------------- of operation.

The development of the public sector in India should be divided into three phases:

A. -------------------------------------------------------- 1975

B. Maturity -------------------------------------------------------

C. -------------------------------------------------------------------

The maximum growth was witnessed --------------------------------------------------------------------------- level tripled from 0.7

mn to 2.1 million.

The number of ---------------------------------------------------------------------------------------------- expanding from a mere Rs

0.29 billion to Rs 993 bn. --------------------------------------------------------------------- (vacillating --------------------------------

band), the investment ----------------------------------------------- Rs 3246 bn.

The--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------product (GDP) of India in 2001-02.

The total investment of Rs. 3246.32 billion has two components : equity and loan. A break-up of the investment shows

multiple sources from which the funds are drawn.

Out of a ------------------------------------------------------------------------ of Rs. 864 billion or 85 per cent. This reflects the

dominant stake of the Central ------------------------------------------------------------------------------------------------------

accounted for Rs. 3308 billion, a share of 69 per cent.

The contribution of the Central ---------------------------------------------------------------------------has been impressive. In some areas like coal, lignite, crude oil, natural gas, lead and zinc, it had exceeded 80 per cent. ------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------

----------------------------

Out of about 1.8 million total ---------------------------------------------------------------, in 2001-02, some 50 per cent was

accounted for by sick units takenover from private ownership.

The annual capacities created in the country ----------------------------------------------------------- drivers of economic growth in the country. -----------------------------------------------------------------------------, cables, foundry forge items, steel products, machine tools, ----------------------------------------------------------------------------------------, locomotives and coaches, X-ray films, contraceptives, watches, --------------------------------------------------------------------------------------------------------------, DDT, LPG, propane-----------------------------------------------------------

Public -------------------------------------------------------------------------------------------------- other facilities for development of

industries in the private sector. Some significant activities in this area may be recapitulated.

Industrial Development Bank of India (IDBI) is one of the financial -------------------------------------------- of India

empowered by an Act --------------------------------------------------------------------------------- be engaged in the manufacture, ---

--------------------------------------------------------------------------------------------------------------- industry, informatics, medical

and health services, leasing and ancillary activities for small entrepreneurs, -----------------------------------------------------------

---------------------- providing shore facilities for fishing, maintenance, repairs, --------------------------------------------------------

The Bank also ----------------------------------------------------------- of any process or product or in providing special and technical knowledge or other services for promotion of industrial ----------------------------------------------------------------- been ------------------------------------------------------------------------------------------------------------------- – IDBI Bank, IDBI Capital Market Services and IDBI Intech – ----------------------------------------------------------------------------------------- offered by -------------------------------------------------------------------------------------------------------------------------------------------------------------------- financing, corporate finance (including short term/working capital loans, venture capital, equipment leasing, refinancing of industrial loans as well as fee based services).

The total assistance ------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------can be gauged from the scale of assistance.

------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------

----------------------------

The scope of financial assistance of SIDBI covers the entire spectrum of Small industry sector, including tiny, village and

cottage industries and assistance is rendered through suitable schemes for setting up of new projects, expansion,

diversification, and modernisation of existing units. Financial services rendered by SIDBI include refinance assistance,

equity assistance, project related financing, promotion and development assistance. Over the last 12 years of existence,

SIDBI sanctioned Rs. 752 billion and disbursed Rs. 523 billion of assistance. Life Insurance Corporation of India (LIC) -----------------------------------------------------------------------------------------------

--- up by Acts of Parliament as statutory corporations, the former for life insurance activities and the latter for carrying out

the ------------------------------------------------------------------------------------------------------------------- private companies

operating in the respective fields. Both life insurance and general insurance businesses are now thrown open to the private

sector. The presence of the public as well as the private insurance companies is expected to ensure a very healthy

competition in the market in the coming years.

The ---------------------------------------------------------------------------------------------------------------, in which the government has been participating actively. Excepting for railways, which is still in the Reserved List, holding a monopoly status, the rest have shifted to a competitive mould, open to initiatives of both, the public and private sectors, some in a collaborative or partnering framework. --------------------------------------------------------------------------------------------------------------- world, exclusively operated as a departmental undertaking. It has an extensive network, spread over 63,000 route kilometers of which 25 per cent is electrified.

--------------------------------------------------------------------------------------------------------------------------------------- Pipav Port

Ltd., formed to provide broad gauge connectivity to the Port of Pipav. SPV) is a firm which embodies a financial contract. It

has no management -----------------------------------------------------------------------------------------------------------.

------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------------------------

Public-private sector partnering is a new innovation in sectors like civil aviation. New international airports planned at

Bangalore, Hyderabad and Goa are to ------------------------------------------------------------------------------------------------up as -

------------------------------------------------------------------------------------------- and state governments and Airports Authority of

India (a Central Government undertaking) will together hold the balance 26 per cent.

An important project, the -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------. The project is one of the largest single highway projects in the world and comprises 5846 kms of Golden Quadrilateral (GQ) connecting 4 metros of Delhi, Mumbai, corridors connecting Srinagar-------------------------------------------------------------------------------------------- is a statutory body------------------------------------------------------------------------------------------------------------------------- is estimated to cost Rs. 540 billion of which Rs. 303 billion would be spent on Golden Quadrilateral link.

Multiple financing ------------------------------------------------------------------------------------------------------- principle. Work on

BOT projects worth over Rs. 26 billion is in progress. Over 20 projects costing Rs. 68 billion are under implementation

under the BOT plan.

2. Briefly discuss the government‟s liberalization policy since 1991. Also, discuss the implications of liberalization in the present context. The economic liberalisation in India refers to the ongoing economic liberalisation, initiated in 1991, of the country's

economic policies, with the goal of making the economy more market-oriented and expanding the role of private and foreign

--------------------------------------------------------------------------------------------------------------------------------------------foreign

investment. Liberalisation has been credited by its proponents for the high economic growth recorded by the country in the

1990s and 2000s. Its opponents have blamed it for increased poverty, inequality and economic degradation. The overall

direction of ---------------------------------------------------------------------------------------------------------------------------------------

a variety of politically difficult issues, such as liberalising labour laws and reducing agricultural subsidies. There exists a

lively debate in India as to what made the economic reforms sustainable.

Indian -------------------------------------------------------------------------------------------------------------------------------, which has

been liberalising its economy since 1978. The McKinsey Quarterly states that removing main obstacles "would free India's

economy to grow as fast as China's, at 10% a year".

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Prime Minister Narasimha Rao, along with his finance minister Manmohan Singh, initiated the economic liberalisation of 1991. The reforms did away ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------and increased financial liberalisation. This has been accompanied by increases in life expectancy, literacy rates and food security, although urban residents have benefited more than rural residents.

Later Reforms-

The Bharatiya Janata Party (BJP)--------------------------------------------------------- reforms, when it was at the helm

of affairs of India for five years.

The BJP-led ----------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------- and began reduction of taxes, an overall fiscal

policy aimed at reducing deficits and debts and increased initiatives for public works.

The ----------------------------------------------------------------------------------------------- but the 1997 Asian financial

crisis and political instability created economic stagnation.

Towards the end of 2011, ------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------- coalition parties and the opposition, the

decision was rolled back. However, it was approved in December 2012.

In the early -------------------------------------------------------------------------------------------- further opened up the

insurance sector by allowing up to 49% FDI. --------------------------------------------------------------- failed to push

through the same reforms and -------------------------------------------------------------------------------------- the first BJP-

led NDA Government under Atal Bihari Vajpayee's administration.

The second BJP------------------------------------------------------------------------------------- Coal Mines (Special Provisions) Bill of 2015. It effectively ended the Indian central government's monopoly over the mining of coal,

which -----------------------------------------------------------------------------------------------------, foreign investments in the sector, since Indian arms of foreign companies are entitled to bid for coal blocks and licences, as well as for commercial ---------------------------------------------------------------------------------------------------------- miners. The move is also beneficial to the state-owned Coal India Limited, which may now get the elbow room to bring in some much -------------------------------------------------------------------- of a better future for millions of mine workers.

Implications of liberalization in the present context-

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

GDP growth rate – India’s annual average growth rate from 1990 – 2010 has been 6.6 % which is almost double than pre

reforms era. --------------------------------------------------------------- 1990’s reforms on growth unclear. Some believe that -------

------------------------------------------------------------------------ 1980 reforms led to crash of economy in 1991, which was

remedied by LPG reforms which were quite more comprehensive. It was IMF loan which gave government to adjust its

economy. ------------------------------------------------------------------------ India’s credibility for loan, but India has been so far a

disciplined borrower.

Industrial Growth Rate – --------------------------------------------------------------------------------- of Industry still remains

stagnantly low at 25%. -------------------------------------------------------------------------------------------------------- one. One

expiation of this is end of policy of imports substitution which derived industrial growth upto 1990. Foreign companies got

free access to ------------------------------------------------------------------------------ technology and larger economies of scale.

India’s ------------------------------------------------------------------------------------ certain degree of investment and efforts in domestic production. It was carried out even when imports were cheaper. This resulted in good and better capacity building upto that time. This was coupled --------------------------------------------------------------------------------- to spend on R&D. Technology Denial ended with liberalization and globalization. ---------------------------------------------- than that of China. But in two decades China has surpassed India by huge margin in case of both Industry and innovation.

Impact on Small Scale in India-

Small scale ------------------------------------------------------------------------- of exports and private sector employment. Results

are mixed, many erstwhile ----------------------------------------------------------------------------- innovation and technology

adoption remains dismal and they exist only on back of government support. Their products are contested by cheaper

imports from China.

Impact on Agriculture-

As already said, -------------------------------------------------------------------------------, people dependent upon agriculture are

still around 55%. Cropping patterns has undergone ------------------------------------------------------- assessed. We saw under

series relating to agriculture that ------------------------------------------------ starting from production to distribution.

On the ------------------------------------------------------------------------------------------------------ Rice are in high demand all

over. Generally -----------------------------------------------------------------------------. If done in sustainable and inclusive

manner, it will have a huge multiplier impact on whole --------------------------------------------------------- processing Industry

is another landmark effect of globalization.

Apart from these, ------------------------------------------------------------------------------------------ fruits of globalization. Now

moving a step further, Information technology is being incorporated into agriculture to facilitate farming.

Impact on Services Sector

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

IT industry

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Exports of these services constitute big part of India’s foreign Exchange earnings. In fact, the only three years India had

Current Account surplus, I.e. 2000-2002, was on back of this export only.

Banking ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Here too IT is on path of bringing banking revolution. New government schemes like Pradhan Mantri Jan dhan Yojana aims

to achieve their targets by using Adhaar Card. Having said this, Public Sector Banks still remain major lender in the country.

Similarly Insurance -------------------------------------------------------------------------------------- etc. But, in India life Insurance

business is still decisively in hands of Life Insurance Corporation of India.

Telecom Sector

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Entry of modern Direct to Home services saw improvements in quality of Television services on one hand and loss of

livelihood for numerous local cable operators.

Education and Health Sector

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Reality is that after deregulation and liberalization, government along with other sectors, pulled its hand from social sectors

too. Now there is Mediocre to high quality options are available in private sector which can be availed as per one’s budget.

In public Sector Less than Mediocre to Mediocre options are available. This leaves huge proportion of aspiring students and

expecting patients.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ .

3. „Public Enterprises in India function at three levels of administration: Central, State and municipal.” Critically examine the statement in the present context. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Public enterprises in India function at the three levels of administration: Central, State and Municipal (or local

bodies). -------------------------------------------------------------------- the Central Public Enterprises, the enterprises pertaining to

the other two categories have not been systematically examined. The Institute of Public Enterprise (IPE) at the instance of

the Planning -------------------------------------------------------------- on the SLPEs.

Departmental undertakings are the oldest among the public enterprises. A departmental undertaking is organised, managed

and financed by the Government. It is controlled by a specific department of the government. Each such department is

headed by a minister. All policy matters and other important decisions are taken by the controlling ministry. The Parliament

lays down the general policy for such undertakings.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As per the provisions of the Indian Companies Act, a company in which 51% or more of its capital is held by central and/or

state government is ---------------------------------------------------------------------- Act, 1956 and follow all those rules and

regulations as -------------------------------------------------------------------------- and registered a number of its undertakings as

government companies for -------------------------------------------------- provides competition to private sector.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Government identified nine central public sector enterprises as ‘Navaratnas’. They are BHEL, BPCL, GAIL, HPCL, IOC, MTNL, NTPC, ONGC, SAIL. --------------------------------------------------------------------------, to enter into joint ventures, to raise capital from domestic and international market etc. In October 1997, the Government granted enhanced autonomy and delegation of financial ---------------------------------------------------------------------------------- ‘Miniratnas’. Presently there are 45 Miniratna Public Sector Enterprises functioning in India.

While formulating the ---------------------------------------------------considerations are relevant:

a) They should have a ------------------------------------------------------------------ of the enterprise and / or other officially

declared policies of the Government;

b) They should -------------------------------------------------------- in writing and not unofficially or informally;

c) They --------------------------------------------------------------------------------------- of the enterprise; and

d) If the basic ---------------------------------------------------------------------------------------------------- unviable, this should be

specifically recognised and provided for and the trade-off between social benefits and financial inviability delimited.

The Central Public Enterprises have ----------------------------------------------------------------------------------------, 1956) to

occupy the commanding heights of the economy, to fill the gaps in areas critical for the development of the country and ------

------------------------------------------------ economic growth.

CPSEs have been playing a positive role in creating employment opportunities. Over the past several years, they have not

only created several job -----------------------------------------------------------------------------------------------. As per government

estimates CPSEs account for around 6% of the total employment in the organized sector of India. They have assisted in the

upliftment of the poor and in promoting equality and offering welfare facilities.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The SPLEs owe their existence not so much to a coherent policy as to historical factors and pragmatic adjustments to

demands of the environment. ------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------present states of the Indian Union. Some of the SLPEs were born on account of

the decisions of the State Governments to wind up their departmental economic activities and instead organise them in the

form of Public ---------------------------------------------------------------------------------------------------------------- up as public

organisation to take advantage of the funding from the financial institutions and development banks. These institutions as a

policy measure do not extend financial support to the government departments.

Many SLPEs were setup in pursuance of the enactment’s legislated by the central government to make the states of the union partners in propelling such activities, on the one hand, ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ weighed heavily in favour of this entrepreneurial role. To sum up, there have been some very specific reasons responsible for establishing the SLPEs. The performance of these enterprises could be judged in terms of indicators having appropriate linkages with their objectives.

Municipal governance in India has ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ in India.

In 1919, a Government --------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------- local government under the purview of the state or

provincial government and specific powers were given.

In its public or governmental capacity, a municipal corporation acts as the agent of the state for the benefit and welfare of the

state as a whole. However, when it acts for the peculiar and special advantage of its inhabitants, rather than for the good of

the state at large, the city acts in a private or proprietary capacity.

Thus, ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ in their corporate or individual capacity, and not for the state or sovereign power.

4. Explain the relevance of marketing mix to public enterprises with special reference to Product mix and Price mix. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The marketing mix is often referred to as the '4 Ps', i.e. product, price, place and promotion. To meet customers' needs a

business must develop products to satisfy them, charge the right price, get the goods to the right place, and it must make the

existence of the product known through promotion.

Product-mix - ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The infrastructural industries such as machine manufacturing industries face all sorts of difficulties, especially while

excelling the global competition. --------------------------------------------------------------------------------------------------

sformation, ----------------------------------------------------------------------------------------------------------- in quality but also

affordable to the industrial users or prospects.

In the utility undertakings, we find communication, transportation, electric and water services. For example -------------------

--------------------------------------------------------------------, quality of coaches and wagons need special treatment.

In the services sector, we find services like banking, insurance, consultancy, tourism etc. These services one way or the other

directly related to the social welfare. In the banking sector, for example, --------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------ special attention.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In the case of PEs marketing consumer durables such as automobiles, refrigerators etc., there is a need for having selective

distribution system. The products may be marketed through the showrooms set-up by PEs themselves or they may distribute

through a dealer network. While adopting dealer network some aspects such as-

(1) ------------------------------------------------------------ of customers,

(2) Strategic deployment ----------------------------------------------------------------------------------------------, and

(3) ----------------------------------------------------------------------------------- to be considered for success in distribution.

For the PEs marketing industrial products, it is necessary to have sound personal selling. By and large, these PEs have to

employ direct distribution or at the most with an agent in between the PE and the buyer.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Price-mix: The most paradoxical aspect is the pricing management in PEs. The mounting social costs have been affecting the pricing decisions ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ”. In the context of Indian PEs, a few other which get priority attention are:

a) The principle of maximum social advantage, and

b) The offering of services at subsidized prices.

Pricing in public enterprises ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ to the PE managements, which is often exercised informally, without recourse to a statutory directive.

5. Discuss any two major strategic issues arising out of disinvestment. As the government ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ privatisation of PSUs.

Disinvestment receipts

The receipts from ------------------------------------------------------------------------------------- from divestment in the period

1991-2011 and this has bridged about 0.2 per cent of the fiscal deficit per year, on an average.

The pattern of divestment receipts is highly uneven with receipts being as high as 0.6 per cent of GDP in 2003-04 and zero in

three of the last 20 years. This is partly because a case-by-case approach to privatisation has been followed with some

stakeholders having a virtual veto on every divestment proposal.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Strategic sale of PSUs took place in the period 2000-03 and removed the recurrent need for subsidising many divested loss

making enterprises (like Modern Food Industries and hotel properties of ITDC and Hotel Corporation of India).

Strategic sales ------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------- in the country, which stands at less than 3 per cent of the total population.

Since many PSUs are over-manned------------------------------------------------------------------------------- of privatisation, which

has made it difficult to sustain public support, even if these effects are in the short-term.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Disinvestment could take one of the following forms:

1) By public --------------------------------------------------------------- offer with a minimum price;

2) By a ---------------------------------------------------out;

3) By placing ------------------------------------------------------------------ partners;

4) By a trade or ------------------------------------------------- person or a consortium;

5) By public ------------------------------------------------------------------------ enterprises);

6) Mass or voucher privatisation; and

7) Liquidation, ------------------------------------------------------ PEs which are not viable).

Two major strategic issues are as follows-

1) Public Flotation-

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The advantage of the tender offer is that there is the possibility of raising the issue price to a higher level. The disadvantage is that it is often too sophisticated for the small investor, at whom the offer is aimed. There is a third alternative i.e. a combination of fixed price and tender offer, for example, ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ahead.

2) Management Buy-out-

Privatisers could also consider solutions such as management/employee buy-outs (MBOs) and employee stock ownership schemes (ESOPs) in order to overcome labour unions’ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------to acquire the company’s stock. Each employee participant receives an allocation of stock to a personal account, and as the ESOP loan is repaid (by the employer contribution to the plan), the plan’s trustees allocate to each employee his share of the total. ESOPs have, up to now, been a peculiarly an American initiative.

Management/employee buy-out has the advantages of causing minimum disruption to the company; it is quick and involves

less disclosures than a ------------------------------------------------------------------------------------------to sale. To be successful, a

management buy-out must satisfy the following three conditions:

1) Management -------------------------------------------------- commitment.

2) Company must --------------------------------------------------------------------------- payments can be met;

3) The company -------------------------------------------------------------------------------------------- market.

Management buy-out is best suitable in the case of small privatisations. Some examples of such buy-outs are:

1) Sale of ---------------------------------------------------------------- of British Shipbuilders, to management and employees, and

2) Privatisation of Nation--------------------------------------------------------------- Freight Corporation.

Other outcomes

Profitability increases after divestment because of reduced agency problems in that multiple and often conflicting objectives

of PSUs become forged into the dominant objective of profit-maximisation.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ The case in point is the experience of Coal India Limited, which continues to be in the public sector with government

shareholding of 90 per cent. However, a minority institutional shareholder, the UK-based Children\'s Investment Fund has

ensured that the government cannot issue directions to the company that would hurt its profitability.

By concentrating on ------------------------------------------------------------------------------------- more efficient in utilising their

resources. As a result, both employee and capital productivity improves even after share issue privatisation.

Since many of the PSUs are over-manned and since there is a tendency to reduce manpower after privatisation, it is obvious

that employee productivity improves.

Part of this ----------------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------- groups of people, political economy problems persist.

These results are in line with global experience that has been documented through research studies in several countries. They

have found that change in management produces better, which highlights the importance of strategic sales in producing

benign outcomes.

In order that disinvestment becomes a more dependable source of receipts to the government, there is a need for a rule-based

approach as opposed to the case-by-case approach being followed now.

To enable that, the government may, for example, --------------------------------------------------- be brought down to 26 per

cent.

In order to get better returns, the government should also try to include strategic sales of PSUs in its arsenal of disinvestment

methods so that ----------------------------------------------------------------------------------------------------------- method to prevent

their continued deleterious impact on fiscal resources. But, these decisions are as much political as economic

6. Write short notes on the following:-

(a) Retraining

Retraining is the process of learning ------------------------------------------------------------------------------- to apply to older

members ------------------------------------------------------------------------------------------ and their skills lose value as

technology, ---------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------- to erode their ability to make a living.

The need for greater partnership and transfer of information between institutions of higher education is essential in reducing

the skills gap for -------------------------------------------------------------------------------------------------- from the employers’

perspective and upgraded and more authentic technical training will help close the gap on the side of educators.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Retraining is sometimes offered as part of workfare programs, which may include support for transportation, childcare, or an

internship.

The ---------------------------------------------------- their human resources by way of training and retraining of the workers.

The Law also allows workers to demand to be trained and retrained for the development of their skills.

The quality of ----------------------------------------------------------------------------------------------------------- profitability of an

organisation,

Continuous ----------------------------------------------------- requirements and helps them reach their potential.

Training enables employees to identify and overcome gaps within their work schedules and appreciate periodic changes that

will sharpen their competencies.

Retraining is required at the following instances:

When after ----------------------------------- to be lacking in some skills.

When --------------------------------------------------------------------------.

When ------------------------------------------------------ its direction/strategy.

When new ----------------------------------------------- culture are creeping up.

----------------------------------------------------------------------------------------------------------------------------

Refresher courses are required periodically to equip and refresh employees on their assigned duties.

=======================================================================================

(b) Board for Industrial and Financial Reconstruction (BIFR)

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Under SICA, it is mandatory for the Board of Directors of a sick industrial company to make a reference and report to BIFR

for formulation of revival -------------------------------------------------------------------------------------------------- to such a

company. BIFR, since its inception in May 1987 till the end of September 2006, has received 6,991 references.

The Board has a Chairman and from two to fourteen other members, all to be qualified as High Court judges or else to have

at least fifteen years of ------------------------------------------------------------------------------------------------------------- the Board

of a sick industrial company is legally obliged to report it to the BIFR, and the BIFR has the power to make whatever

inquiries are needed to determine if the company is in fact sick.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The BIFR was intended to bridge the legal gap between sickness and revival. It would impose time schedules for revival

related activities to be ---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------- and developing a unified approach to dealing with sick

companies, speeding up the start of corrective action. The BIFR was meant to either turn companies around within six

months or order closure.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ BIFR has had mixed success. Some examples of ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------lack of political willingness to take tough decisions. The BIFR in practice often became a way of prolonging the life of inviable companies for years at taxpayer expense.

========================================================================================

(c) Central Vigilance Commission (CVC)

Central Vigilance Commission (CVC) is an apex Indian governmental body created in 1964 to address governmental

corruption. ----------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------ various authorities in

central Government organizations in planning, executing, reviewing and reforming their vigilance work.

It was set up by the Government of India in February, 1964 on the recommendations of the Committee on Prevention of

Corruption, headed by --------------------------------------------------------------------------------------------- the field of

vigilance. Nittoor Srinivasa Rau, was selected as the first Chief Vigilance Commissioner of India.

The Annual Report of the CVC not only gives the details of the work done by it but also brings out the system failures which

leads to corruption in various Departments/----------------------------------------------------------- and cases in which the

Commission's advises were ignored etc.

The Commission shall consist of:

A Central ----------------------------------------------- Chairperson;

Not ---------------------------------------------------------------- - Members;

The current Central ------------------------------------------------------------------------ Vigilance Commissioners, one is Mr.

Rajiv and the other is Shri T.M. Bhasin

The CVC is headed by a Central Vigilance Commissioner who is assisted by two Vigilance Commissioners.

The Central Vigilance Commissioner and the Vigilance Commissioners are appointed by the President after obtaining the

recommendation of a Committee consisting of:

The --------------------------------------------- (Chairperson)

The --------------------------------------------------------------------

The Leader of the second largest ------------------------------------------------ or majority group leader in parliament

The Central Vigilance Commission has its own Secretariat, Chief Technical Examiners' Wing (CTE) and a wing of

Commissioners for Departmental Inquiries (CDI).

As on 21 March ---------------------------------------- against sanctioned strength of 299 (including the post of CVC and 2 VCs)

Role-

The CVC is not an investigating agency.

The only investigation --------------------------------------------------------------------------------------------------- which is done through the Chief Technical Officer.

Corruption investigations against government officials can proceed only after the government permits them. The CVC publishes a list of cases where permissions are pending, some of which may be more than a year old.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

an Act after being duly passed in both the Houses of Parliament.The CVC has also been publishing a list of corrupt government officials against which it has recommended punitive action.

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