Encounters with the Indian public sector

As mentioned earlier, I will write, in my first blog of 2009, on the oft-debated issue of the efficiency, or the lack of it, of Indian government-controlled organizations. The Indian public sector is one of the largest in the world. Indeed, an important arm of that – Indian Railways – is often mentioned as the single largest employer in the world. Of no less importance is the fact that among the larger countries in the world, the Indian government agencies and government-controlled companies are the most vilified. There are two other countries which have populations of at least 5% of humanity – China and the USA. Several Chinese state-owned companies are indeed world leaders, while for many others, as well as several non-corporate arms of the government, you would hardly find an objective study allowed or available. Their American counterparts, while fewer albeit admittedly superior, are surely no match for the world-class private-sector organizations that the USA can boast of. That leaves India, where people do not miss a chance to criticize the public sector player in any field that is competitive. Are we unduly harsh on a soft target, or is there a merit in the avalanche of criticism directed at the Indian public sector? If my recent experience is an indicator, the latter is surely true.

Since the 1980s, the public sector has faced increasing challenges from strong, aggressive and nimble competitors from the private sector. These organizations can be broadly classified into three categories. First, where monopolies exist, and probably will continue for the foreseeable future, such as the railways and the postal services. Second, in sectors such financial service and telecom, where the public sector incumbent is still the leader, but has to constantly innovate and reinvent itself to hang on to the top spot. And finally, where the changed market dynamics have enabled newer entrants to pull away from the erstwhile leader from the public sector. Think airlines. Some day, the third category may mutate into one with no meaningful public sector player. Remember those government-owned television manufacturers from the 1980s – EC, Konark, Webel and others?

I am not worried about the last two categories, where market forces and governmental intervention will ensure that the consumer – or to use that uniquely Indian word “public” – gets a minimum level of service. It is in the areas of public sector monopoly that Indians are at the mercy of the government apparatus. Take the Department of Posts, for example, which I had the misfortune of coming into contact with late last year. The post office in India serves several purposes. It is, naturally, the channel for all mails and postal cargo and therefore one of the key lubricants that keep the huge machinery that is India running. In a country where telephone penetration is just over 30% and internet penetration is a measly 5%, postal services are of paramount importance. Equally important is the role that post offices play as a quasi-bank – you can borrow and invest through a post-office, and I reckon more Indians have access to a post-office than they have to a bank. Sadly for the institution, and more so for Indian citizens, the Department of Posts has not been able to break away from the shackles of bureaucracy and inherent customer-unfriendliness that dogs state-owned Indian organizations.

The very first impression that I got was that the employees, with honorable exceptions, are not aware that they are in the service industry. The simple fact that the person across the counter is a customer seems to have escaped them. Be it in answering simple queries, or patiently listening to complaints – our friends at the post office have a thing or two to learn from the private sector. On my asking an official as to why the interest rate on a certain financial product worked out to be lower than that advertized when I had invested six years back, all I was told was that they just read it off the computer screen. On top of that, I was accused of questioning the scruples of the official and his colleagues. All in return for asking a simple question that deserves a short and simple answer.

Second, these organizations always seem to employ more people than they need. At any given point in time, a significant percentage of the employees can be found chatting, reading the newspaper or enjoying their cup of tea or cigarette. Several others appear busy, but then anyone can be kept busy in a place where sub-optimal use of technology has resulted in most of the records being handwritten. The woefully low efficiency level is common knowledge in India. So much so that the Postmaster of a post-office I visited complained that with several colleagues away on leave and for training, he did not have enough resources. It does not take a human resources guru to figure out that we had a leader of a team of more than fifty people who is utterly incaapble of, and probably has no control over, allocating his resources.

And finally, can someone teach them basic manners? I almost had papers snatched from my hand by one of the employees, while another (at a different post office) purposely walked over from his desk with the sole intention of arguing with me. I guess it stems from a misplaced sense of entitlement; a belief that they are the best thing that happened to India since the country got independence and therefore deserve differential and deferential treatment. The common man should just be thankful that he gets an opportunity to be served by this genetically superior specimen of the human race!

For reasons alluded to earlier, the Department of Posts can play a very important role in the development of the country. It can tap into its vast pool of employees to more aggressively market financial products, thus boosting revenues and increasing productivity. It can even go a step further and market insurance policies of its public sector cousin – the Life Insurance Corporation of India – or mutual funds from its clearly superior public sector relatives from the fund management industry. It can take advantage of its geographic reach to provide services such as centralized Internet connectivity to villages. The list goes on and on, and I am sure similar stories are true for other state-controlled institutions. But does anyone care what the “public” thinks or wants?