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Day 80 – Q 4.Do you think customer satisfaction is hardly a priority for public sector organisations like banks, electricity boards, airlines etc? If so, why? Do you think financial bailouts of public sector organisations should be stopped? Critically comment.

4. Do you think customer satisfaction is hardly a priority for public sector organisations like banks, electricity boards, airlines etc? If so, why? Do you think financial bailouts of public sector organisations should be stopped? Critically comment. 

क्या आपको लगता है कि ग्राहकों की संतुष्टि शायद ही सार्वजनिक क्षेत्र के संगठनों जैसे कि बैंक, बिजली बोर्ड, एयरलाइंस आदि के लिए प्राथमिकता है? यदि हां, तो क्यों? क्या आपको लगता है कि सार्वजनिक क्षेत्र के संगठनों के वित्तीय जमानत को रोक दिया जाना चाहिए? समालोचनात्मक टिप्पणी करें।


The liberalization of the Indian economy in 1991 set off a chain of paradigmatic changes in most sectors where growth of private participation was seen along with the presence of public organisations. In this environment, every metric saw competition for outperforming the other, including customer satisfaction, which in the digital age becomes all the  more important.


  • In the private sector, customer experience has become a core metric of performance in the past decade while public sector organisations around the world are waking up to the implications. 
  • Some government agencies have caught the wave—reimagining their services end to end from the standpoint of their customers—and employing next-generation levers from the private sector, such as digitization and design thinking, advanced analytics, and automation, to upend traditional ways of working. For example, Rural electrification corporation(REC).
  • However, these examples remain the exception, not the rule. Given competing priorities and structural barriers to change, many agencies bet small—making changes piecemeal and spreading investment thinly across services and channels. Such efforts may lead to incremental improvements but fall short of delivering the impact public sector organisations (and citizen customers) expect. For example, Air India airlines.
  • The factors for such low performance, with regards to customer experience, can be seen below – 
  • A monopolistic mind-set is a pervasive obstacle. When customers don’t have a choice, it dramatically removes a major incentive for governments to innovate and improve service. It also hampers agencies’ ability to set priorities.
  • In public sector undertakings there are no clear objectives. In case the undertaking takes social welfare into consideration, then it will neglect other aspects like customer service and these are bound to be a burden on the exchequer.
  • In public sector undertakings there are many conflicting interests. On the one hand are workers and labourers who organize themselves into trade unions and wish to bargain with the management. Then are the interests of the technical staff, secretariat staff, who all organise themselves into trade union. Customer interest tends to get neglected in such a scenario.
  • In public sector undertakings usually there is red tapism and routine. In fact the whole system becomes so much burdened with red tapism and routines that it becomes almost impossible to come out of the rut. The result is that the things set delayed and the undertaking always suffers for want of policies, decisions and quick disposal of the issues, which eventually affects customer experience.

Many of these public sector entities, such as the national carrier Air India and telecom players BSNL and MTNL, are loss-making, and in the case of BSNL, so cash-strapped that they are unable even to pay their employees’ salaries on time. Public sector banks, on the other hand, are carrying the burden of non-performing assets (NPAs) and after a series of mergers and consolidation efforts, they find themselves overstaffed. All this has heightened public apprehensions with regards to bailouts to such public sector organisations.

  • True capitalism should accept business failure as a normal hazard, not a point of social shame. But bailout is an act of giving financial assistance to a failing business or economy to save it from collapse.
  • A fiscally constrained government can ill-afford to throw good money after bad in the fruitless enterprise of keeping sick units on life support. An honest consideration of the reasons why some of these public sector units are in such a pitiable plight must acknowledge the role of successive governments in gaming the system in favour of new entrants, particularly in the private sector.
  • For example,BSNL and MTNL were actively denied critical technology interventions that would have enabled them to make a quantum leap in the quality of services they provided.
  • Similarly, in the case of public sector banks, it is the unwillingness on the part of successive governments to give effective functional autonomy to the banks’ chairman – and, worse, to use PSBs to underwrite political projects, including farm loan waivers – that contributed substantially to the overall rotting of the financial system.
  • In such a scenario, bailout by governments becomes necessary to overcome the deficiencies due to its past actions. But frequent bailouts affect the productivity and efficiency as well as producing a lax work culture. In this regard, disinvestment and privatisation measures can be helpful.
  • Recently, the Government’s announcement of a full sell-out of BPCL is historic. To put a perennial profit-maker like BPCL on the block shows genuine intent for privatisation. It breaks a taboo that profit-making PSUs can’t be sold. Such a move will also bring down the need for bailouts by governments.


The state of our sick public sector needs surgical intervention, for sure. But bailouts should be based on standard guidelines and sell out should be preferred if the organisations isn’t improving. In addition to the obvious benefits of creating liquidity for the government and driving productivity, a successful privatisation strategy will not only attract foreign participants across a range of sectors, but also underpin the innovation and entrepreneurship India needs to achieve its growth ambition to a US$5tn economy and beyond.

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