Two mechanisms being actively pursued to reform the system of public enterprises in India are the holding company and the performance contract or the Memorandum of Understanding (MoU). These have no doubt been useful; the government itself has pinned much hope on the MOUs, to reduce dysfunctional interference, and to reorient the enterprises towards their primary goals and tasks. However, there is much uncertainty in these efforts. This paper’s primary consideration is not to discuss these mechanisms as these MoUs are being implemented in India; instead the aim is to show that attempts at changing only the form of the relationship between government and PEs, and which side steps the questions of politics and economics (to which the content of the interface between government and PEs is intimately related), have little potential to bring about change. The paper suggests that the true content of these mechanisms, whatever the stated objectives and however good the design, are already showing signs of being distorted and ritualized to serve the purpose of keeping the public enterprise system in a state of disorientation.
Holding Companies, Performance Contracts And Task Orientation In Public Sector
Author : Sebastian Morris