Nitish Sengupta

Mar 21 : An unexpected aftermath of the Wall Street meltdown has been the return of the public sector to the top-end managerial job market in India. During 2007 and 2008, in the course of meetings of the public sector salary revision committee with the top management of Central public sector units, a constant refrain was that the public sector no longer attracted MBAs from good management schools and that the IIM graduates in particular were out of their league. IIM graduates were commanding fancy salaries from multinational investment bankers and FMCG companies, and public sector enterprises (PSE) were in no position to compete with them.

This picture changed overnight. Investment bankers have done the vanishing act and most multinational companies and private sector consumer goods giants, hard pressed to retain their profitable status, have either stopped fresh recruitment or drastically curtailed it. Many of them have not even visited the top business schools this year. It is the public sector which has emerged as the knight in shining armour in this situation.

It has been reported that 41 of the 234 students of the 2009 batch of IIM Ahmedabad, India’s premier business school, signed up for public sector jobs. The picture is the same for IIM Kolkata and several other institutes which for years boasted of having only MNC bankers as their main recruiters. In fact, all IIMs and other leading business schools are following the same pattern.

Not only has the Indian economy escaped relatively unscathed from the devastating effects of the Wall Street crash, but the PSEs in India have been able to face the raging recession much better than the private sector companies thanks to their conservative approach which exposed them in the past to criticism from management pundits. They have not had to significantly curtail their staff strength or stop recruitments, unlike some of their private sector counterparts. The job security that they provide, which was often lampooned in the past, has now emerged as an invaluable stock in trade.

Yet another feather in their cap is that the government has recently given their officers a hefty pay hike of around 50 per cent on the basis of the recommendations of the second pay revision committee. Also, their emoluments are no longer linked with the emoluments drawn by government officials. This is in sharp contrast with the behaviour of a section of India Inc. imitating their western counterparts in lay offs and salary cuts.

Interestingly, the rumour mill has it that some public sector managers, who were lured by lucrative offers and had migrated to the private sector in recent times, are on a come back trail. It is also rumoured that some senior bureaucrats who were thinking of taking early retirement and joining the private sector have put such plans on hold. They have now discovered new virtue in the job security that the public sector over the private sector’s job-today-gone-tomorrow management style.

But the return of the public sector to the "fancy" job market is only one aspect of the spectacular ascent of the public sector to glorious heights. Central public sector enterprises — like the National Thermal Power Corporation (NTPC), Bharat Heavy Electricals Ltd. (Bhel), Oil and Natural Gas Corporation (ONGC), Gas Authority of India Ltd. (Gail), Steel Authority and the National Buildings Construction Corporation — have scaled new heights in terms of production, dividend record and social responsibility. The number of chronically-sick enterprises has steadily gone down as many have started earning operating profits. Even when the stock market has crashed like never before, the quoted prices of the listed PSE shares have declined marginally. Against the sharp decline of the BSE sensex by 38 per cent since September 2008, the PSU index has gone down by a modest 20 per cent. Incidentally, the Indian public sector today has significant percentage of private share holding. Six out of the 10 leading companies listed on the Bombay Stock Exchange are public sector enterprises.

Both in insurance and banking, the public sector enterprises have performed much better than most of their private sector counterparts: Life Insurance Corporation’s market share increased impressively in 2008-2009; Public sector banks increased their business and profitability; In the October-December quarter of 2008-2009 the deposits of the State Bank of India (SBI) increased by 36 per cent as against around 24 per cent for the entire sector; In the same quarter the SBI’s profits rose by 37 per cent while the profits of the ICICI Bank went down by 3.5 per cent.

An interesting straw in the wind is that on January 13, 2009, Infosys transferred Rs 1,000 crores from private sector banks to the SBI. In so doing it followed thousands of small depositors favouring the safety of a PSU bank over private sector banks. All this amply demonstrate that the public sector, much maligned in the past, has scaled glorious heights in recent times. It has convincingly shown its inherent strength and capability in the face of the great challenge posed by the ongoing global meltdown. The Government of India deserves a big hand. If India hopes to be a model growth engine and a change agent for today’s troubled world, her public sector will surely be a major component in that process.

By Nitish Sengupta