They were launched as promising businesses but interfering politicians rendered them unviable. In effect shaking the lives of thousands of their employees. Haroon Mirani reports on the human toll of the public sector disasters.

Two employees of Joinery Mills Pampore attempted suicide in 2001 after their wives succumbed to different diseases.
Two employees of Joinery Mills Pampore attempted suicide in 2001 after their wives succumbed to different diseases.

Fayaz Ahmad Bhat was highly excited when he was appointed in Jammu Kashmir Handloom Development Corporation (JKHDC) in 1977. The job enticed dreams of a prosperous life ahead. Hardly did he know, that some years later, he would curse the day, everyday.

The JKHDC is one of the many public sector undertakings that the state government launched with fanfare but left to fend for itself in rainy days.

Bhat has not received any salary for last seven months. Earlier this year he saw his wife die – helplessly. “All she needed was medicines and treatment, which I couldn’t afford,” says Bhat. “I asked for help, begged around but that yielded too little to save my wife.”

Still Bhat hopes that the government may do something to revive the Public Sector Undertakings (PSUs) and situation may get better. But with every passing day life seems to crumble. His son and daughter had to drop out of school, as he could not afford their fee. His son is too frail to work as a labourer and often the family barely manages a single meal a day.

“I am yet to clear the debt accumulated for my wife’s treatment and shopkeepers too can’t provide us groceries on credit for such a long time” says a fast ageing Bhat.

The government sees loss making PSU’s as white elephants. Its employees call the tag a manipulation. “They create an institute, then break its legs, and then ask it to run, and dance too,” says Mohammed Altaf, a former Assistant Manager CONFED (Cooperative Consumers Federation). “We used to live happily as we were selling rapeseed oil, fertilizers, sugar and cloth.”

CONFED was created by government to provide easy access of essential consumer items like sugar, oil, cloth and other such items to people at affordable rates.

But the government soon took away the crucial four products from them and gave these to private players. “Even as the products were given to others, we were not given any new business model to survive,” says Altaf. “We were asked to breathe after choking our oxygen.”

Ultimately in 1999, CONFED breathed its last. Ten years down the line Altaf sells tea on a street side stall in Lal Chowk. “For five years I fought but then I had to take up any job for living, so I started making tea,” said Altaf while serving a cup of tea to a customer. Some of his colleagues are engaged in similar jobs and others who don’t what to do any such job continue to seek justice by running from pillar to post.

Ironically government adjusted ten employees of CONFED, which according to insiders had strong political influence.

The decline of Jammu Kashmir State Road Transport Corporation (SRTC) had a similar story behind it. “Our premium routes were taken away and given to private operators and we were asked to ply on hilly and high-cost low-profit routes,” says Shakil Ahmad Kuchay, president SRTC employees union. “Then they demanded the profits.”

In case of CONFED, the High Court has passed three orders, ordering adjustment of CONFED employees. As the government did not respond properly, it was served a contempt notice. To every order government has an appeal and to every contempt it has an excuse.

“They are using delaying tactics to wear us down,” says Altaf.

Altaf’s journey from a government official to a tea maker and Bhat’s crumbling life are not the extreme examples of the fate PSU’s employees met. There are horrific instances too.

Two employees of Joinery Mills Pampore attempted suicide in 2001 after their wives succumbed to different diseases. They couldn’t afford their treatment as they had been denied salaries for months together. There was so much of desperation that one of them used a sickle to cut his throat. He survived with 26 stitches. The other one survived too after a prolonged stay in hospital.

Out of 17 state PSUs in Jammu and Kashmir, 10 have incurred total loss of Rs 1,876.72 crore till March 31, 2009.

Over the decades, J&K has established 20 working companies and three statutory corporations. Barring J&K Bank, where the government holds 53 percent share, just a few PSUs that sustain on their own. Others largely depend on government aid. By the end of last fiscal, according to Comptroller and Auditor General, J&K government had invested a whopping 5412.52 crore rupees in PSUs and most of it has gone “waste”.

While the government does not have a concrete revival plan for the PSUs, the employees continue to suffer. It has become a storehouse of biggest human tragedy in government sector.

“The family doesn’t let us die and government doesn’t let us live,” says Altaf.

During the course of time the families associated with PSUs have gone through tremendous hardships.

To survive, some of them had to sell their household articles. Some have even lost their houses like one Basher Ahmad erstwhile employee of CONFED, who nowadays lives in a rented accommodation in Batmaloo.

Many have given up hopes of marriage. Mohammed Ayub looks much older than his age. An employee of one of the sinking PSUs, he was in early thirties, about to marry, when the salary stopped coming. “With it came all problems and survival became my priority,” says Ayub, now in his forties with graying hair. “Forget my marriage, I have two sisters who are also unmarried.”

Another of Ayub’s colleague has four unmarried daughters, and he is too old to work elsewhere.

Many of the PSU employees are facing stress related disorders and many are in the grip of fatal diseases. There are some confirmed cancer patients, who just want to die. Many are succumbing to the stress and poverty.

In 2009 alone JKHDC lost three employees, two in Kashmir and one in Jammu.

Ghulam Nabi Zargar and Mohammed Ismail Mir, both hailing from Bandipora, could have been cured if only they had money. Chander Mohan Sharma was Assistant Financial Adviser in JKHDC. With grown up children, increased social obligations and no salary Sharma’s stressful life ultimately came to an end with a heart attack.

Other employees at PSUs fear the same fate. Psychiatric problems are haunting them too. One employee of a PSU can already be seen roaming in Lal Chowk, after he lost his mental balance.

Often the government describes PSUs as being over burdened with employees, but chooses to ignore the basic question – who recruited the employees. Take the example of SRTC. From 1996 when Farooq Abdullah came to power after a  prolonged governor rule, recruitments into SRTC started from successive ministers. “Everybody from Hussam u Din Banday to Bashir Ahmad Kitchloo to Bashir Ahmad Nengroo to Ajay Sadhotra managed to get their blue eyed boys employment in the loss making unit,” accuses Kuchay. SRTC management didn’t recruit a single person, even as hundreds were pushed by government in the corporation. With the result the expenditure bill of SRTC bloated.

For most of their history, state run PSUs were small rackets. The rulers and the concerned ministers would get their blue eyed boys in the top management.

“Government deputes a KAS officer with no stakes to run a PSU and the same officer takes the cream and destroys the PSU,” said an insider. “Government later decides to shut down the lost making PSU and recalls the said officer and only low level employees suffer with no accountability to the upper class.”

Scandal in the making

It is an irony that the PSUs have properties worth billions of rupees at prime locations but still they are penniless.

Employees in the PSUs feel that officials and politicians are eyeing these properties.

“They want to do the same with PSU properties like they did with Roshni Scheme” says an official in one of the PSU’s. The Roshni scheme was originally meant to generate Rs 20,000 crore by selling government land. Later it was converted into an official charity, wherein many illegal encroachers and influential people were granted prime land for peanuts.

“They are already doing so, like what we saw in CONFED whose property at prime locations at Numaish Gah, Qamarwari and Lassipora is already gone,” says the official.

Jammu Kashmir Industries (JKI) is one of the richest PSU’s with regards to assets and these days it is busy selling these assets to “pay the salaries” to its employees. As of now they have sold their premises at Haft Chinar, Pampore Joinery Mills and Rajbagh Silk Factory to various government departments. “Currently they sell it to government departments but once the demand from the departments lessens, the option of private buyers will spring up and then you can only imagine the situation.”

Jammu Kashmir State Road Transport Corporation has property worth more than Rs 850 crore. The corporation can be brought to life with selling some of its assets as is the norm elsewhere, but nothing of the sorts happens in J&K.

Over the period of time its land has been systematically taken. “The land where there is Neelum Cinema, Broadway Hotel, Sangarmal Shopping Complex, JK Bank corporate headquarter and others was ours,” says Shakil Ahmad Kuchay chairman SRTC workers association. “If SRTC is wound up, just wait to see what happens with the rest of our prime locations property.”

Government attempts

Off and on government constituted many committees to redress the problem of PSUs, but their recommendations have never been implemented.

The exercise started with 1980 by the submission of Rajan report, later came, Godbole Report (1998), Core Group Report (2004  with Khursheed Ganai as chairman) and High Power Committee Report (2007).

All the committees had recommended reorganization of PSUs. Godbole Committee had recommended that SICOP should be merged with SIDCO, J&K HPMC should be merged in J&K State Agro Industries Development Corporation Ltd, J&K Handicrafts (S&F) Corporation and J&K Handloom Handicrafts Raw Material Supplies Organisation should be merged with J&K Handloom Development Corporation.

Government is extremely reluctant to invest in these PSUs to make them profitable, even as previous examples have shown the way.

As of now JK Cements is a profitable PSUs, but it was also in red in the past. After hectic negotiations with employees union, the PSUs was brought back to life from the brink of sell off. Government invested around 100 crore in the PSU and today it is running in profit. Last year it made a profit of Rs 3.56 crore.

There is a belief among the employees that government does not want PSU’s to be again on their feet.

“If we all will apply for VRS in JKHDC it will need Rs 50 crore and government seems willing to pay,” says Ghulam Nabi Wani, an official at JKHDC. “But we can flourish and get self reliant with only Rs 15 crore, but they are not ready for that.”

Similarly Jammu and Kashmir Handicrafts (sale and export) Corporation Limited (HCL) which has suffered a loss of Rs 88.85 crore till March 31, 2009, can be made viable with one-time funding of Rs six crore for purchase of stocks for trade. “This could make it self-sufficient for meeting its annual expenditure,” says an official.

In 2001 the cabinet had passed an order to create a PSU restructuring fund and the Finance Department was asked to formulate a proposal regarding its composition and functioning. Afterwards nothing was heard about that fund.

The previous government led by PDP created Rs 34 crore PSU Reserves & Restructuring Fund to manage the golden handshake for employees. It could not take off as the 3000 employees willing to go home required Rs 98 crore. Later the government came with the idea of setting up Rs 200 crore Asset Reconstruction Company (ARC) that would take over the “infected assets” of state’s ailing financial institutions and offer them a clean balance sheet. It also did not take off for lack of follow up even though the central government was willing to offer Rs 150 crore.

Congress government asked senior IAS Officer B R Kundal (now a MLC) to chalk out the details of the VRS and golden handshake. In a brief report he identified the surplus staff and suggested the assets of the PSUs be sold out to create the corpus fund required for implementation of the VRS scheme. The scheme is under implementation and hundreds of employees have availed the scheme.

Drabu committee

A committee on PSU reforms lead by Dr Haseeb Drabu has undone the recommendations of Godbole committee set up in 1998. While Godbole recommended closures, mergers, re-engineering and operational halt of various Public Sector Undertakings, Drabu calls for the state to be the principal development agent operating through owned enterprises and intervening in labour, capital and product markets.

Drabu was the the youngest member of Godbole committee. He says he was dissatisfied with the committee’s recommendations. He sees a possibility of reviving most of the PSUs that are in the red right now (see box). Submitted during governor’s rule and accepted by the incumbent government as well, Drabu says the approach (of earlier committees) lacked recognition of the basic feature of the state’s economic system and situation.

While Drabu’s dissatisfaction with what his colleagues suggested during the Godbole committee meetings were not taken into consideration, his report is likely to emerge as a bible for PSU revival and 20,000 employees associated with them – most of them working in lowest wage grade.

While the PSUs are in a very poor state of affairs, both financially and organizationally, Drabu’s report says that the magnitude of the problem can be managed with a total capital base of Rs 500 crore and output of a few hundred crore.

“While the intensity of the problem is severe, the size of the problem is very manageable,” he says.

Until the government decides over the fate of PSUs the employees continue to suffer with their families being collateral casualties.


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