Public sector firms can't grow from taxation

 Public sector firms can't grow from taxation

Maruti Suzuki India Chairman RC Bhargava said that the government should not be running businesses. 

Maruti Suzuki India Chairman RC Bhargava said that the Indian government should be involved in business operations as public sector enterprises are inefficient in generating enough resources to fund their own growth.

Maruti Suzuki India Chairman RC Bhargava said that the Indian government should be involved in business operations as public sector enterprises are inefficient in generating enough resources to fund their own growth.

In an interview with PTI, Bhargava said that public sector companies need all-time support to grow and need funds from the government for capital investments in their respective organizations.

The Maruti India Chairman was asked if the government should engage itself in running business enterprises based on his experience of witnessing the transformation of the then government-owned Maruti Udyog Ltd to Maruti Suzuki India Ltd, majority owned by Japan's Suzuki Motor Corporation.

"Government-run companies are not efficient, and they don't have productivity. They are not able to generate profit and resources. Every time, they need government support to grow. There are many public sector companies that have witnessed growth from internal resources. They need funds from the government for most capital investments. You cannot have industrial growth from the taxation period," he told PTI.

internal resource generation, and a company must create wealth, rather than becoming a wealth eroder.

"Government companies have not been wealth creators. If the fundamental point of wealth creation is not met, you will be having a losing system. The country is going to lose because you're taking away money from the taxpayers to support this inefficient working," Bhargava added.

Citing an example of Maruti before privatization, he said that the public sector firms are handicapped by the entire environment like the limitation of being an instrument of state under the Constitution.

Bhargava recollected how the then Maruti Udyog Ltd dealt with several parliamentary committees and complied with the Official Languages Act with people having to learn to type on both Hindi and English typewriters.

He said there were many non-value-adding activities that interfered and added costs for what prevented the then Maruti Udyog Ltd to move forward and grow.

In the end, he said that the failure of the public sector is not unique to India, it has happened elsewhere such as in Russia, the UK, France, and Japan.

 

(With PTI inputs)