What are the Administrative Problems of State Enterprises?

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1. Autonomy for State Enterprises

The very object of constituting State enterprise as separate units in the form of Statutory Corporation or Joint-Stock Company is to preserve their autonomy in administration of their affairs. Departmental undertakings have to conduct their activities as per the usual government procedures. But the State enterprises are expected to display their operational efficiency and carry on their business as per the economic criteria.

The efficiency standard will be lowered if the State enterprises succumb to the pressures of the Government itching for interference in their affairs to gain some political ends. The administration of State enterprises should be guided by motives of efficiency and socio-economic justice to be carried out within the broad framework of public policy consistent with the canons of sound business management. The commercial aspect should not be lost sight of in an attempt to extend the area of Government ownership and control over business enterprises.

The greatest disadvantage in Government ownership of business is the tendency for political considerations to impair the securing of economic results”. Hence autonomy should be guaranteed by the Government to its industrial, commercial and service undertakings, as a condition conducive to their successful working

Autonomy to Public Sector undertakings implies the following :

1. Freedom to take decisions in respect of the business or allied activities in order to promote growth, enhance efficiency and maintain economic viability.

2. Authority to make appointment of the staff at different levels and to regulate their service conditions.

3. Independence from financial dependence on allocation in Government budget and immunity from the control of the Treasury over its financial operations.

4. To provide suitable scope to the management for showing its initiative and enterprise and recognition of the independent status of the officers.

The objectives of ensuring autonomy are as under:

1. To avoid red tapism and bureaucratic methods in the management of industrial and commercial enterprises.

2. Enabling the management to show initiative and drive essential for intrinsic progress of state ventures in industry and trade.

3. Conducting the internal administration of the enterprises according to commercial principles through quick decisions and prompt follow-up actions.

4. Prevention of malevolent effects of favouritism, political pressures and ensuring that management is carried on without fear or favour of any department or Ministry in the Government.

5. Rendering standard services to the users or customers by elastic policies suited to their convenience and adjustable to the trends in the market, changes in technology etc.

Public corporations should be given complete independence to manage their day-to-day administration. They should be left free to execute the programme in the interest of the public. Government can control them by means of directions wherever a policy of public interest is involved.

Since independence, a large number of State enterprises have been established and the State has been facing the problems relating to their administration. The various experts’ committees that were constituted to advise the government on the management of State enterprises have given divergent and over-contradictory views.

Nevertheless, they have thrown some light on the nature of problems and have given some valuable suggestions. Without going into the details of the suggestions made by the various experts’ committees, a general reference to some aspects of administrative problems of State enterprises may be made here.