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MS -92 -Management of Public Enterprises
Q1 “The development of the public sector in India can be divided into three Phases.” Briefly discuss.
At the time of independence, India was backward and underdeveloped - basically an agrarian economy with weak
industrial base, high rate of unemployment, low level of savings and investment and near absence of infrastructural
facilities. Indian economy needed a big push. This push could not come from the private sector because of the
lack of funds and their inability to take risk with large long-gestation investments. As
such, government intervention through public sector was necessary for self-reliant economic growth, to diversify
the economy and to overcome economic and social backwardness
OBJECTIVES: The public sector aims at achieving the following objectives:
• To promote rapid economic development through creation and expansion of infrastructure

• To generate financial resources for development
• To promote redistribution of income and wealth
• To create employment opportunities
• To promote balanced regional growth
• To encourage the development of small-scale and ancillary industries, and
• To promote exports on the one side and import substitution, on the other.
Role of Public Sector: The public sector has been playing a vital role in the economic development of the country.
Public sector is considered a powerful engine of economic development and an important instrument of self-
reliance. The main contributions of public enterprises to the country's economy may be described as follows:
1. Filling the Gaps in Capital Goods: At the time of independence, there existed
serious gaps in the industrial structure of the country, particularly in the fields of
heavy industries such as steel, heavy machine tools, exploration and refining of oil,
heavy Electrical and equipment, chemicals and fertilizers, defense equipment, etc.
Public sector has helped to fill up these gaps. The basic infrastructure required for
rapid industrialisation has been built up, through the production of strategic capital
goods. In this way the public sector has considerably widened the industrial base of
the country.
2. Employment: Public sector has created millions of jobs to tackle the unemployment problem in the country.
Public sector accounts for about two-thirds of the total employment in the organised industrial sector in India. By
taking over many
sick units, the public sector has protected the employment of millions. Public sector
has also contributed a lot towards the improvement of working and living conditions of workers by serving
as a model employer.
3. Balanced Regional Development: Public sector undertakings have located their

plants in backward and untrodden parts of the county. These areas lacked basic
industrial and civic facilities like electricity, water supply, township and manpower.
Public enterprises have developed these facilities thereby bringing about complete
transformation in the socio-economic life of the people in these regions. Steel plants
of Bhilai, Rourkela and Durgapur; fertilizer factory at Sindri, are few examples of the Development of backward
regions by the public sector.
4. Contribution to Public Exchequer: Apart from generation of internal resources

and payment of dividend, public enterprises have been making substantial
contribution to the Government exchequer through payment of corporate taxes, excise
duty, custom duty etc. In this way they help in mobilizing funds for financing the
needs for the planned development of the country. In recent years, the total
contribution from the public enterprises has increased considerably, between the
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periods 2002-03 to 2004-05 the contribution increased by Rs 81,438 crores on the

average.
5. Export Promotion and Foreign Exchange Earnings: Some public enterprises

have done much to promote India’s export. The State Trading Corporation (STC), the
Minerals and Metals Trading Corporation (MMTC), Hindustan Steel Ltd., the Bharat
Electronics Ltd., the Hindustan Machine Tools, etc., have done very well in export promotion. The foreign
exchange earnings of the public sector enterprises have been rising from Rs 35 crores in 1965-66 to Rs 42,264
crores in 2004-05.
6. Import Substitution: Some public sector enterprises were started specifically to

produce goods which were formerly imported and thus to save foreign exchange. The
Hindustan Antibiotics Ltd., the Indian Drugs and Pharmaceuticals Ltd. (IDPL), the
Oil and Natural Gas Commission (ONGC), the Indian Oil Corporation Ltd., the
Bharat Electronics Ltd., etc., have saved foreign exchange by way of import substitution.
7. Research and Development: As most of the public enterprises are engaged in high technology and heavy
industries, they have undertaken research and development programmes in a big way. Public sector has laid strong
and wide base for self-reliance in the field of technical know-how, maintenance and repair of sophisticated
industrial plants, machinery and equipment in the country. Through the development of technological skill, public
enterprises have reduced dependence on foreign knowhow. With the help of the technological capability, public
sector undertakings have successfully competed in the international market.
In addition to the above, the public sector has played an important role in the achievement of constitutional goals
like reducing concentration of economic power in private hands, increasing public control over the national
economy, creating a socialistic pattern of society, etc. With all its linkages the public sector has made solid
contributions to national self-reliance
Causes for the expansion of public enterprise
At the time of independence, India was backward and underdeveloped - basically an

agrarian economy with weak industrial base, high rate of unemployment, low level of
savings and investment and near absence of infrastructural facilities. Indian economy
needed a big push. This push could not come from the private sector because of the
lack of funds and their inability to take risk with large long-gestation investments. As
such, government intervention through public sector was necessary for self-reliant
economic growth, to diversify the economy and to overcome economic and social
backwardness.
Let us discuss the rationale or causes for the expansion of public sector enterprises in
India.
1. Rate of Economic Development and Public Enterprises: The justification for public enterprises in India was
based on the fact that the targeted rate of economic growth planned by the government was much higher than could
be achieved by the private sector alone. In other words, the public sector was essential to realize the target of high
growth rate deliberately fixed by the government.
2. Pattern of Resource Allocation and Public Enterprises: Another reason for the
expansion of the public sector lies in the pattern of resources allocation decided upon
under the plans. In the Second Plan the emphasis was shifted to industries and mining,
mainly basic capital goods industries to be developed under the aegis of the public
sector. Thus more resources for industrialization were funneled through the public
sector.
3. Removal of Regional Disparities through Public Enterprises: Another important reason for the expansion of
the public sector was the need for balanced development in different parts of the country and to see that there were
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no serious regional disparities. Public enterprises were set up in those regions which were under developed and
where local resources were not adequate. Good examples are the
setting up of the three steel plants of Bhillai, Rourkela and Durgapur and the Neyveli
Project in Madras which were meant to help industrialise the regions surrounding the
projects.
4. Sources of Funds for Economic Development: Initially, state was an important source of funds for
development. The surplus of government enterprises could be reinvested in the same industries or used for the
establishment and expansion of other industries. Profits of public sector industries can be directly used for capital
formation which is necessary for the rapid development of the country.
5. Socialistic Pattern of Society: The socialistic pattern of society envisaged in the

Constitution calls for expansion of public sector. For one thing, production will have
to be centrally planned as regards the type of goods to be produced, the volume of
output and the timing of their production. Besides, one of the objectives of the
directive principles of the Indian Constitution is to bring about reduction of the inequalities of income and wealth
and to establish an egalitarian society. The Five Year Plans have taken this up as a major objective of planning. The
public enterprises were used as major instruments for the reduction of inequalities of income and to bring about a
more equitable distribution of income in several ways.
6. Limitations and Abuses of the Private Sector: The behavior and attitude of the private sector itself was an
important factor responsible for the expansion of the public sector in the country. In many cases the private sector
could not take initiatives because of the lack of funds and their inability to take risk with large long-gestation
investments. In a number of cases, the government was forced to take over a private sector industry or industrial
units either in the interest of workers or to prevent excessive exploitation of consumers. Very often the private
sector did not function as it should and did not carry out its social responsibilities. Accordingly, the government was
forced to take over or nationalize the private sector units.
To sum up, the expansion of the public sector was aimed at the fulfillment of our
national goals, viz., the removal of poverty, the attainment of self-reliance, reduction in inequalities of income,
expansion of employment opportunities, removal of regional imbalances, acceleration of the pace of agricultural
and industrial development, to reduce concentration of ownership and prevent growth of
monopolistic tendencies by acting as effective countervailing power to the private
sector, to make the country self-reliant in modern technology and create professional,
technological and managerial cadres so as to ultimately rid the country from
dependence on foreign aid.
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2. Explain the Public Enterprises accountability through courts with special reference to promotion.
The extent of financial autonomy and accountability has been at the heart of discussions about improving the
performance of PEs. There have been conflicting views about the right mix of financial autonomy and
accountability which can ensure an efficient and effective performance from these enterprises
Public Enterprises (PEs) as we all know are set up wholly or substantially owned by
the government for the purpose of undertaking activities of industrial, manufacturing,
trading or allied nature. They are government owned enterprises functioning under
both central and state governments. The PEs are corporate bodies, set up either under
specific acts of Parliament or under Companies Act. The PEs since they are
established with public funds, are accountable to the public i.e. through the parliament
Autonomy in simple terms means freedom to take decisions and function accordingly
while accountability refers to rendering of accounts to some higher authority. The
financial autonomy given to PEs means empowering them to take decisions on their
own in the areas of investment management, financing of investments and monitoring
the financial performance of respective enterprises based on sound business principles
and the wisdom of the financial administrators. Insofar as investments are concerned,
other things remaining the same, PEs should have freedom in identifying the projects,
preparing the detailed feasibility project reports, appraising the projects, making
investment choices, and implementing and monitoring them. They should also be free
to decide the optimal level of investments in the various items of inventory book debts
and floating stock of cash. By the same principle they should be free to peg the level
of current liabilities to any proportion of the current assets. The financial decisions in
the normal run may be made by these enterprises as guided by the cost of capital.
They should possess the freedom to choose among the various debt-equity propositions. They should be at
liberty to select bankers, financial institutions and the
channels of money and capital markets for financing their working fund requirements.
Subject to the social constraints imposed on them by the government, these enterprises should be vested with
the autonomy to develop their own costing and pricing systems, norms of profitability .and monitoring mechanism
to ensure the desired financial status alike any business firm in the private sector.
Thus there are six tiers of financial autonomy. These include the parliament, the
government, the Comptroller and Auditor General (CAG) of India, the Courts of Law i.e. .the Supreme Court of
India and the High Court, the mass media and the citizen.
All these six institutions can have an explicit policy about the financial autonomy they
may like to provide to PEs in order to enable them to operate efficiently and
effectively. As the enterprises under discussion are both 'public' and 'enterprise’, these
institutions cannot be over jealous in controlling each and every aspect of financial
business of PEs. The respect for the corporate status of these enterprises will have to
be maintained by these institutions. While saying so we do not deny the need for
exercising checks and balances on the financial decision making in these enterprises
The various courts of law may direct PEs to alter their financial decisions if the
fundamental rights of the citizens are affected. The mass media and the citizens may
criticise certain financial decisions by PEs and as a result the PEs may have to
reconsider the matter. Such decisions may include matters relating to pricing, and
selection of suppliers of plant and materials which may attract public resentment. At
times public enquiry can be come out on certain decisions taken by the management
of P.E.'s. For instance in 1970, on the recommendations made by the Committee of
Public Undertakings, a one man commission was set up to enquire into award of
contract for laying some pipelines to an American firm by the Indian Oil Corporation
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On account of government control, a departmental undertaking suffers from all the ills
of bureaucratic functioning. For instance, government permission is required for each expenditure, observance of
government decisions regarding appointment and
promotion of the employees and so on. Because of these reasons important decisions
get delayed, employees cannot be given instant promotion or punishment. On account
of these reasons some difficulties come in the way of working of departmental
undertakings.
In the financial control scope, the Administrative Court analyses and oversees
accounts of bodies, services and entities subject to its jurisdiction, prepares reports
and gives its opinion on the Government’s General Accounts (CGE - Conta Geral do
Estado). The Court also undertakes an evaluation of the lawfulness of the contracts,
contract minutes, decrees and dispatches regarding to public sector, retirement
pensions, etc. The Court resorts to different types of control namely, the pre-
inspection, successive and concurrent inspection. The Court will only fulfill its
functions and competences, meet the expectations of clientele and provide quality
services through the use of an improvement of the public services it delivers
Approaches and the Role of Accountability
A Definition of accountability, approaches and traditions in different countries, e.g. narrow and negative definition
(control and punishment) versus positive definition (informing the public, providing information on objectives and
results etc.). Role of accountability, e.g. assigning responsibility (or blame), ensuring democratic control, ensuring
openness and dialogue, creating trust, affirming basic values and ethical standards, improving performance.
À Roles of different actors, e.g. government organisations, ministers, parliament, the public and independent
organisations (Ombudsman, Audit Offices, Courts).*
À Importance of the traditional accountability chain: government organisations à ministers à parliament à the
public, versus other approaches e.g. performance based accountability; direct accountability: government
organisations à parliament; government organisations à public.*
Democratic and Political Accountability Meaning of ministerial accountability (responsibility?): e.g. provide
answers and explain personal decisions; give an account of the activities and performance of organisations the
minister heads; enquire into and remedy faults; repair systemic deficiencies; resignations by ministers.
A Political accountability versus managerial accountability, e.g. can they be separated

or will the minister continue to be accountable and responsible for managerial
decisions? Relationship between accountability and responsibility, e.g. can Ministers
be accountable for decisions without necessarily being responsible? Relationship
between responsibility and blame, e.g. can a minister accept responsibility without
being to blame?
À Evolution of political and democratic accountability and implications of managerial autonomy. Direct
accountability of government organisations to parliaments. To what degree is democratic accountability and control
necessary (and even justifiable) in relation to operational issues?
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Accountability Across Levels of Government
Problems in ensuring accountability in an environment where responsibilities are shared between levels of
government, and different interests and accountability requirements of different levels may make accountability
especially problematic.
À What is the potential for moving from legally based relations between levels of governments to more
performance based relations?
Performance-Based Accountability
À Definition of performance-based accountability, e.g. to demonstrate and account for performance in light of
agreed performance targets. Does performance based accountability reduce the need for more traditional
accountability? Does a shift from compliance or legally based accountability to performance based accountability
conflict with traditional accountability arrangements? How can advantages and benefits of moving to performance-
based accountability be demonstrated to interested groups (e.g. politicians, media, and the public)?
À Conflicts between compliance accountability and managerial autonomy and effects

of compliance accountability on performance. Effects of blame culture on performance, how is it possible to move
from a blame oriented and confrontational
accountability? The role of risk management in responding to blame culture.
À How to ensure accountability where activities cut across organisational structures
of Government (partnerships, shared accountability, horizontal accountability)? Can a
contractual approach make it possible to move from a standard approach to
accountability to a differentiated approach? Are the same accountability arrangements
appropriate for all type of Government services or would a more differentiated
approach be appropriate
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3. Critically examine the performance evaluation of Railways in the present

context.
Growing competition from other means of transportation has forced railway companies throughout the world to
search for increased performance. Travelling time
is the most obvious performance indicator that may be improved by introducing high-speed trains.
High-speed trains requires straight track or at least tracks with large curve radii and long transition curves not to
impair the ride comfort, another performance indicator. Building new tracks with large curve radii is costly and can
only be justified where the passenger base is large.
Trains with capability to tilt the bodies inwards the curve is a less costly alternative
than building new tracks with large curve radii. The tilt inwards reduces the
centrifugal force felt by the passengers, allowing the train to pass curves at enhanced
speed with maintained ride comfort. Trains capable to tilt the bodies inwards is often
called tilting trains.
Tilting has today become a mature technology accepted by most operators, but not favoured by many. There are
different reasons behind this fact; the non-tilting trains
have increased their speed in curves (however at a reduced level of ride comfort),
reducing the potential for travelling time reduction by tilting trains to approximately
10 -15 %. The popularity is also impacted by low reliability and motion sickness on
certain services.
Revenue Generation
The total approximate earnings of Indian Railways on originating basis during 1st
April - 30th November 2009 were Rs. 55586.69 crore compared to Rs. 51117.55
crore during the same period last year, registering an increase of 8.74 per cent. The
total goods earnings have gone up from Rs. 34394.97 crore during 1st April - 30th
November 2008 to Rs. 37337.46 crore during 1st April - 30th November 2009, an
increase of 8.56 per cent. The total passenger revenue earnings during first eight
months of the financial year 2009-10 were Rs. 15597.44 crore compared to Rs.
14440.92 crore during the same period last year, registering an increase of 8.01 per
cent. Indian Railways have carried 574.38 million tonnes of revenue earning freight
traffic during April-November 2009. The freight carried shows an increase of 7.44 per
cent over the same period last year. The parcel earnings from April to September 2009 has been Rs. 613.08 crore,
registering a growth of 18 per cent as compared to the earnings of last year. The revenue generation through
disposal of scrap from January 2009 to November 2009 was Rs. 2512 crore.
Indian Railways’ Vision 2020
Indian Railways’ Vision 2020 document presented in the Parliament by the Railway
Minister aims at massive addition to its route network, segregation of passenger and
freight services into separate double-line corridors, raising the speeds of passenger
trains from the current 130 kmph to 160-200 kmph on some routes, zero accidents and
equipment failures. The vision 2020 also envisages the implementation of at least four
high-speed rail projects to provide bullet train services at 250-350 kmph
A White Paper indicating the Railway’s present organizational, operational and

financial status based on its performance in the last five years was also presented in
the Parliament. White Paper will help understand the health of the Indian Railways
better so that plans for corrective and constructive action for the future can be drawn
Unprecedented thrust on safety related issues
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Unprecedented thrust on safety related issues was given during the year, particularly
to enhance Safety at Level Crossings, Interlocking and Manning, provision of Limited
Height Subways, Normal Height Subways, Road Under Bridges (RUBs), Road Over
Bridges (ROBs), Expenditure on Road Safety Works, Catch Sidings etc, Safety
aspects of Signals and their back-up power supply, Enquiry of Fire related Accidents,
Monitoring of working of Loco Pilots, etc. As on March 31, 2009, there are total 1337
ROBs/RUBs works at various stage of planning and execution. During 2009-10, 40
ROB/RUB have been completed till November 2009 under various schemes. Indian
Railways maintained 34,220 level crossings out of which 17244 had gatekeepers and
16,976 crossings were unmanned. In 2008-09, about 259 unmanned level crossings
were provided with gatekeepers. And during 2009-10, total 132 unmanned gates have
been provided with gatekeepers till November 2009. Comprehensive Disaster
Management Plan of Indian Railways has been prepared with the approval of the
Board and has been sent to National Disaster Management Authority. Railways are
one of the few Ministries who have prepared their Disaster Management Plan as per
the provisions of Disaster Management Act, 2005. In the current calendar year 2009, during January to 14th
December, 2009, 154 consequential train accidents took place as against 159 during the corresponding period of the
previous year
Implementation of dedicated freight Projects
Progress has been made in the implementation of Western and Eastern Dedicated
Freight Corridor (DFC) projects in the current year. Japanese ODA assistance for
Western DFC project was sanctioned for the first loan of Rs. 130 crore for engagement of Engineering Services
Consultancy services for phase-1 (Rewari-Vadodara section. Request for Proposal (RFP) for engaging Engineering
Services
Consultancy for Phase-I of Western DFC has also been issued by DFCCIL in
October, 2009. For the remaining portion of Western DFC i.e. Phase-II, (Mumbai to
Vadodra and Revari to Dadri) preparatory survey has been commenced by JICA
consultants in November 2009. In case of Eastern Dedicated Freigh Corridor, Asian
Development Bank (ADB) sanctioned a Project Preparation Grant of 1.5 million US
Dollars for Khurja-Ludhiana section and ADB appointed consultants started
feasibility studies in the section in July 2009 and final report is expected by February
2010. For the proposed World Bank funded Khurja-Mughalsarai section of Eastern
DFC, important achievements include appointment of General Consultant for Khurja-
Kanpur section by DFCCIL
As a follow up to the announcement made by the Minister of Railways Kumari

Mamata Banerjee in her Railway Budget 2009-10 speech, for the convenience of
accredited media persons, the Ministry of Railways has decided to replace the existing
system of Coupon Books for accredited press correspondents by more convenient
Photo Identity Card based system for availing concessional train fare. Photo
identification card will be issued by Railways to accredited press correspondents
instead of coupons books. Accredited press correspondent will be eligible for 50 per
cent concession in the basic fares all classes of Mail/Express trains & all other charges
are to be collected in full and 50 per cent in the all inclusive fares of all classes of
Rajdhani/Shatabdi/Jan Shatabdi trains. This concession will not be admissible in
Garib Rath trains. The new system of concession based on Photo Identity card and theincreased concession on
Rajdhani/Shatabdi/Jan Shatabdi trains will be effective from 15th October 2009
Air conditioned Yuva trains for unemployed youth
The first ever ‘Yuva Trains’ which are targeted mainly for the unemployed youths of
the country has been introduced between Howrah-Delhi on 30th December 2009.
These ‘Yuva’ trains are being introduced to ensure that the youth of low income
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groups can travel at low rates between major cities. The ‘Yuva Train’ fares will be
applicable to unemployed persons also between the age group of 15 to 45 years.
Initially, 60 per cent of the total number of coaches will be earmarked for ‘Yuva’
category. The remaining will be earmarked for general passengers (non-Yuva). If
successful, these ‘Yuva trains’ will be extended to other areas of the country. The
total chargeable fare for Yuva passengers inclusive of all other charges like
Reservation Fee, Superfast Train Charge and Development Charge would not exceed
Rs.299/- up to a distance of 1500 kms and Rs. 399/- for distance beyond 1500 up to
2500 kms
Only Ladies Special EMU Train Services
As announced in the Railway Budget 2009-10, the Ministry of Railways introduced ‘Only Ladies’ Matrabhumi
EMU train services in Delhi, Chennai and Kolkata suburban on the pattern of Mumbai suburban as working women
face considerable difficulties in traveling for work. These services will run for the convenience of women
passengers during office hours
Super Fast Parcel Express Trains
With a view to attract high value and transit sensitive non-bulk parcel traffic, Indian
Railways introduced faster parcel services/premium parcel express trains named
“Tejshree Parcel Sewa” between Delhi-Howrah-Delhi, Delhi-Ahmedabad/Vapi-Howrah as a pilot project. This
is envisaged as a time-tabled service from dedicated terminals with guaranteed transit time
Development of Private freight terminals
With a view to increase Railways market share of automobile traffic and to facilitate
aggregation and distribution centres for automobile traffic, a scheme is under
finalization for development of automobile hubs near rail heads through Public
Private Partnership (PPP) mode. The Railways Minister laid the foundation stone for
one such auto hub at Shalimar in West Bengal in November 2009. A policy is under
finalization to facilitate rapid development of a network of freight terminals with
private investment to provide efficient and cost effective logistics services to end
users including door to door services. Freight terminals can be green field facilities
developed by private parties on private land or brown field facilities i.e. existing
private sidings/container terminals on private a land which can be permitted to be
converted to private freight terminals under the provisions of the proposed policy.
Perishable Cargo Centres under Kisan vision Projects
With a view to encourage creation of facilities of setting up cold storage and temperature controlled perishable
cargo centres through Public Private Partnership mode, a Task Force of representatives from the concerned
ministries, Container
corporation of India Ltd. (CONCOR), Central Warehousing Corporation Ltd. (CWC) and cold chain operators,
has been constituted to draw up a road map for implementation of the project and identify few locations for
pilot project for
development of perishable cargo centres. The Pilot Project will be implemented through PSUs engaged in logistics.
Foundation stone for the first pilot project under the Kisan Vision Project has been laid by the Minister of Railways
at Singur in
November 2009.
375 Stations to be developed as “ ADARSH “ Stations
Ministry of Railways has decided that 17 more railway stations may be added to the existing list of 358 Adarsh
Stations. With this, the number of stations selected as ‘Adarsh Stations’ goes upto 375. Railways will develop
Adarsh Stations with basic facilities such as drinking water, adequate toilets, catering services, waiting rooms and
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dormitories especially for lady passengers, better signage and other basic facilities are universally available.
Necessary work has already been commenced at various
stations
Development of Multi-functional Complexes
Multi-functional Complexes are being developed at 50 railway stations of serving places of pilgrimage, industry
and tourist interest in different parts of the country this year. Multi-functional Complexes in station premises to
provide rail users facilities like shopping, food stalls and restaurants, book stalls, PCO/STD/ISD/Fax booths
medicine & variety stores, budget hotels, underground parking etc. Responsibility for development of these
facilities will be entrusted to IRCON and Rail Land Development Authority (RLDA) and Zonal Railways. The
foundation stone for such first ever Multi-functional complex was laid by the Minister of Railways, Kumari
Mamata Banerjee, at Siliguri in October 2009.
Provision of Quality Foods in Trains
Instruction has been issued to Zonal Railways and Indian Railway Catering &
Tourism Corporation (IRCTC) in May 2009 for improvement in quality of food in
mobile catering units over Indian Railways. Janata meals priced at Rs. 10/- have been
revamped on Indian Railways, to meet the catering requirement of common
passengers. On an average 1.1 lakh Janata meals are sold every day on Indian
Railways through refreshment rooms, food plazas and other catering stalls, etc. To
meet the catering requirement of common people, Railways have plans to open
Janahaar cafeteria exclusively to sell economy meals and Janta Meals at reasonable
rates. Six Janahaar Cafeteria have been commissioned at Howrah, Bangalore,
Secunderabad, Chennai, Lucknow and Gorakhpur railway station and five more will
be set up shortly at Sealdah, Patna, Kharagpur, New Jalpaiguri and Mysore. Catering
services of the similar level of Rajdhani/Shatabdi Express are being provided in newly
introduced ‘Duronto’ Trains. All sleeper class passengers of Duronto Trains are also
being provided meals on-board. In addition
Improvement and modernisation of Signalling System
In order to increase efficiency and enhance safety in train operations, Electrical/ Electronic Interlocking
system in replacement of over-aged mechanical/multi cabin signaling system, has been provided at 339
stations during year 2009 (January to November). To improve reliability and visibility of signals, out dated filament
type signals have been replaced with long life, highly durable LED signals at 853 stations. A total number of 578
stations have been provided with Data Logger for predictive maintenance and intensive supervision of Signalling
system. Auto Block Signalling to increase line capacity has been provided on 209 Route kms. On Board Train
Protection System (TPWS) has been commissioned on Chennai Central- Gummidipundi suburban section (50
RKMs) of Southern Railway as a pilot project. This system prevents ‘Signal Passing At Danger’ cases and
enforces implementations of speed restriction. Second pilot project of Train Protection Warning System on main
line (Delhi-Agra section of Northern/North Central Railway) is under way. Automatic clearance of Block Section
has been provided at
448 sections through use of axle counters. This will reduce dependence on human
element & enhance safety. A total A total of 439 numbers of level crossing gates have
been interlocked with signals to enhance safety. Track Circuiting for enhancing safety
by reducing human dependence, has been provided at 1387 locations in various
station sections.
Importing communication sytsem on Railways
During Financial Year 2009-10, about 2500 Route km of Optic Fibre Cable OFC cable laid upto November 2009 by
RailTel Corporation of Indian Limited. A total of around 37,000 Route Kms of OFC has so far been laid on Indian
Railway system alongside railway track for improving communications. Works for laying 9,000 Kms of OFC
further are under progress. Mobile Train Radio Communication system for communication among Train Driver,
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Guard, Station Master, Control Office and field maintenance staff during run of the train has been commissioned at
about 700 Route Kms on Howrah -Dhanbad, Guwahati-New Bongaigaon and Mathura-Jhansi sections. Works are
under progress for another 2700 Kms. Walkie-Talkie VHF communication between Guard, Driver & Stations has
been provided
Setting up of new ancillary units for diesel and electric locos
The foundation stone was laid by the Minister of Railways for setting up of two
factories for manufacturing electric and diesel engine components and also
inaugurated the Project for Distribution of ‘Carbon Credit’ saving CFLs at Dankuni in
West Bengal in December 2009. The factories will manufacture components and sub-
assemblies for Electric locomotives for the Chittaranjan Production Units and the Diesel Locomotive Works. Other
new production units to be set up by Indian
Railways are; Rail Coach Factory at Rae Bareilly, Coach factory at Kanchrapara,
Diesel Locomotive Factory at Marhowra, Electric Locomotive Factory at Madhepura
and Rail Wheel Factory at Chhapr
Izzat monthly season ticket scheme launched
As announced by the Minister of Railways, Kumari Mamata Banerjee, while presenting Railway Budget 2009-10
in the Parliament, the Ministry of Railways introduced a new scheme of uniformly priced Monthly Season Tickets
(MSTs) at Rs. 25/- inclusive of all surcharges which will be issued upto a distance of 100 Kilometers to persons
working in unorganised sector with monthly income not exceeding Rs. 1500/-. This new scheme is called “Izzat”.
These ‘Izzat’ MSTs are being issued for journeys with effect from 01.08.2009.
Expert Committee for Developing Business Models and innovating Funding
An Expert Committee under the chairmanship of Dr Amit Mitra, Secretary General, FICCI for developing business
models and innovative funding techniques through Public Private Partnership (PPP) instruments has been
constituted. The committee has held several meetings and made recommendations which are at various stages of
implementation. A five member Expert Committee under the Chairmanship of Shri Sam Pitroda, on the usage of
Information and Communication Technologies (ICT) in the Railways has been constituted.
Railways Launch Historic Non Stop Duronto Trains
Indian Railways added one more feather to its cap when it launched its new class of
passenger carrying ‘Duronto’ trains in September 2009. So far seven ‘Duronto’ trains
have already been introduced on various major sectors in the country. ‘Duronto’ is a
non-stop superfast passenger carrying train in the history of the Railways and heralds
a new era of rail travel in the country ensuring better speed, comfort and security for
passengers Outer colour scheme design of ‘Duronto’ coaches is distinct. The fare of
‘Duronto’ trains includes the cost of meal. In addition, 35 new passenger carrying
trains were introduced, one Yuva train was introduced, 17 trains were extended and
frequency of 8 trains was increased
Transportation of drinking water and Fodder free of cost to draught affected

areas
With a view to facilitate better availability of basic commodities like water and fodder
to drought affected areas in the country, Ministry of Railways has decided as a special
case to permit the transportation of drinking water and fodder by rail, free of charge,
to the notified drought affected districts of twelve states at “no cost” to the affected
States. These States are Andhra Pradesh, Assam, Bihar, Himachal Pradesh,
Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Nagaland, Rajasthan
11

and Uttar Pradesh. These instructions have come into force with effect from 01.12.2009 and remain valid upto
31.01.2010.
Dream of Kashmir Valley People Fullifillled
The Prime Minister dedicated to the nation the newly constructed 18 km long rail line
between Anantnag and Quazigund, the last stretch of the railway line in the Kashmir
Valley in October 2009. Earlier in October 2008 and February 2009, the railway lines
from Anantnag to Mazhom (66 km) and Mazhom to Baramulla (35 km) were
inaugurated by the Prime Minister. The entire 119 km long rail line from Baramulla to
Quazigund in the valley has now become operational covering important stations like
Sopore, Hamre, Pattan, Mazhom, Budgam, Srinagar, Pampore, Kakapora,
Awantipura, Panjgam, Bijbiara, Anantnag and Sadura in both the directions.
First Ever Rail link with sikkim
Sikkim will have the first ever rail connectivity with the laying of foundation stone of
the new broad gauge railway line between Sikkim’s small township of Rangpo and
West Bengal’s border town of Sivok. This 52.7 km long new broad guauge Rangpo-
Sivok line will be constructed at a cost of Rs. 1339.48 crore and has been declared as
a ‘National Project’ for which 25 per cent of the fund would be provided by Ministry
of Railways through their gross budgetary support and balance 75 per cent as an
additionality by Ministry of Finance. The survey for further extension of this line
from Rangpo upto Sikkim’s capital Gangtok (69 km) has also been completed
recently and survey report is under examination in the Ministry of Railways
Implementation of integrated Security system on Railways
Railways have taken several measures to strengthen security activities. An amount of

approximately Rs. 344 crore has been sanctioned for implementation of Integrated
Security System to strengthen surveillance mechanism at 195 sensitive stations of the
country. Besides this, Rs.67 crore have already been distributed amongst the Zonal
Railways for procurement of modern security gadgets. 12 Commando Companies of
RPSF have been raised for special duties. The Minister has also announced raising of
one ‘Mahila Commando Company’. RPF will also set up its own commando training
centre at Canning in West Bengal. Thirty two RPF personnel have been awarded this
year for their commendable acts. For the first time President Police Medal for
gallantry has been awarded to RPF for showing exemplary bravely during terrorist
attack on 26/11/2008 at CST, Mumbai.
Introduction of mobile bridge inspection units
The Indian Railways as part of its high-tech operations has introduced Mobile Bridge
Inspection Units (MBIU) for inspection and maintenance of railway bridges to ensure
more safety. Cranes provided in these Mobile Bridge Inspection Units have been
imported from Germany. Carrier vehicles and power units for these MBIU have been
provided by Rail Coach Factory, Kapurthala, a Public Sector Undertaking under the
Ministry of Railways. Approximate cost of each MBIU is about eight crore. Two
MBIU have recently been introduced on Indian Railways, one in Northern Railway
and the other in Central Railway
Railways Bags four energy conservation Awards
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The Ministry of Railways has achieved another milestone when three of its Zonal
Railways bagged four of the National Energy Conservation Awards in 2009. In
Railway sector, Western Railway headquartered at Mumbai (Maharashtra) bagged the
first prize, North Eastern Railway headquartered at Gorakhpur (Uttar Pradesh) got the
second prize and West Central Railway headquartered at Jabalpur (Madhya Pradesh)
received the Certificate of Merit. In Office Building sector, West Central Railway
again bagged the first prize for its General Manager Office Building
IRTC Launches Toll Free 24*7 Helpline
Indian Railways Catering and Tourism Corporation Limited (IRCTC), a public sector
undertaking of the Ministry of Railways, has launched a centralised Toll Free
telephone No.1800-111-139 for the convenience of railway users to suggest/ grievances relating to catering services
on Indian Railways. The facility is available 24×7 on this number and railway passengers can register their
complaints/ suggestions regarding food and catering services. Wherever possible, action is taken on real time basis
for redressal of their grievances “139 - Rail
Sampark”, the authorized enquiry for Indian Railway has recently introduced the facility of Railway enquiry
through SMS which is a premium service. The users can obtain information regarding PNR status, fare, seat
availability and arrival/departure by sending SMS in the specified syntax to 139
Enhanced fares concessions for students . amature artists and plice medallists
As announced by the Minister of Railways, Kumari Mamata Banerjee in the Railway

Budget 2009-10, the Ministry of Railways has decided to extend the facility of free
Monthly Season Tickets (MSTs) in 2nd class in the trains to students attending
Madrasa, High Madrasa and Senior Madrasa for commuting daily between the
stations serving their place of residence and Madrasa. It has also decided that 60 per
cent concession in the fares of Metro Rail Kolkata will be granted to both boy and girl
students studying in schools/Madrasas/recognized vocational institutions upto classes
academically equivalent to class XII. It has also decided to enhance the concession for Police Personnel of 60 years
and above who have received President’s Police Medal for Distinguished Service from 30 per cent to 50 percent for
men and 60 per cent for women in the basic fares of Mail/Express trains of all classes and in the all-inclusive fares
of Rajdhani / Shatabdi / Jan Shatabdi trains.
Introduction of E- Procurement System (EPS)
E- Procurement System (EPS) is aimed at attaining total transparency in public procurement system of Indian
Railways. The E-Procurement Application for Indian Railways (www.ireps.gov.in) has been successfully rolled out
by CRIS for 13 Zonal Railways/Production Units. Till now Railways have uploaded over 44192 e-tenders and
about 39485 e-tenders have been opened as on December 14, 2009.
Upgradation of diesel locomotives , modification in coaches and use of CNG and BIO FUEL
Through indigenous efforts, the Horse Power of EMD diesel locos has been increased
from 4000 to 4500 which will permit them to haul heavier loads at higher speeds. It is
planned to further upgrade the EMD locos to 5000+ Horse Power. Manufacture of
latest technology EMD locomotives has been stepped up to 150 locos in 2009-10.
Trials have also been completed and one power car of DMU has been converted to
run on dual fuel mode using CNG and further proliferation is in progress. Design for
Toilet facilities in DMUs has been finalized by the RDSO. ICF will turn out all the
DEMU rakes during the current year with toilets. Railways has placed orders for
procurement of bio-diesel. Successful laboratory tests have been carried out by using
10% blend of bio-diesel on Trains. Introduction of these alternative fuels are
13

environment -friendly and reduce dependency on fossil fuels. Bullet proof cabs have
been provided for the first time on diesel locomotives working in Lumding -Badarpur section to thwart the threat to
running staff in sensitive area.
Revamping of railways recruitment boards
The Ministry of Railways took several steps to revamp Railway Recruitment Boards
(RRBs). It has been decided to hold the examination for a particular post on the same
date simultaneously by all RRBs It has now been decided that the exam of all RRBs
throughout the country. The question paper of RRB exam will be printed in addition
to Hindi, Urdu and English, in local languages listed in the Eight Schedule of the
Constitution of India, falling within the jurisdiction of that RRB. For this purpose first
official language(s) of the State(s) in which all the divisions/Units of that RRB are
located, is taken as the local language(s). It has also been decided to waive the
examination fees for women, minorities and economically backward sections of
society, having annual family income of less than Rs. 50,000/-. Special recruitment
drives and special promotion drives were carried out for wiping out backlog vacancies
of SCs and STs.
Innovative steps taken for better medical care
Ministry of Railways has decided to open Medical and Nursing Colleges on Railway
land with existing Railway Hospital under PPP which will have seats for wards of
railway employees. To start with, five places have been identified i.e. Kanchrapara,
Kharagpur, Kolkata, Chennai & Guwahati. This will also help to meet shortage of
Doctors & Nurses. To augment the medical services, introduction of Senior
Residency and DNB programmes (Post Graduate Teaching) have been introduced in
Railway hospitals. For procuring quality drug for our railway beneficiaries a new
“Drug Procurement Policy” have been introduced. Tele medicine has been started in
18 centres and many more are in process. Hospital Information Management System
is being started in Jagjivan Ram Hospital, Western Railway, Mumbai as a pilot
project and will be extended to all the hospitals of Indian Railways. To provide
medical facilities to retired railway employees membership for Retired Employees
Liberalized Health Scheme-97 has been reopened till 31.03.2010 for those retired
employees who could not join this scheme earlier.
Introduction of Luxury Tourist Train.
Keeping in consonance with its commitment towards promotion of tourism, the Indian
Railways in association with Rajasthan Tourism Development Corporation (RTDC) has launched one more luxury
tourist train, Royal Rajasthan on Wheels, on a tourist circuit covering major destinations of Rajasthan besides Agra
and Delhi. This is the fourth train in the series and second in association with RTDC, Two more such trains, one in
association with IRCTC, called ‘Maharaja Express’ and one with Government of Punjab are in the pipeline.
Enhanced productivity linked bonus
For the financial year 2008-09, Productivity Linked Bonus (PLB) equivalent to 75 days wages has been paid to all
non-gazetted Railway employees. About 13.05 lakh non-gazetted Railway employees have benefited by this
scheme. The PLB paid for the year 2008-09 is the highest bonus payment ever made by the Railways reflecting the
splendid performance of Railways during the year
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4. Explain the relevance of wage policy to public sector units with special Reference to pay revision for
executives.
Wages means all remuneration expressed in terms of money and includes remuneration payable under any award or
settlement, overtime wages ,wages for holiday and any sum payable on termination of employment(bonus is not
included)
Wage as monetary reward is paid to an employee for the services rendered by him. A sound wage policy should be
aimed at social justice, which eventually means that the working class gets its due share. This is important because
even after five decades of Independence, more than 50 percent of the urban population and nearly 38 percent of the
rural population live below the poverty line.
So a rational wage policy must be able to furnish a standard of living and must be able
to eliminate the relative poverty. Here it is important to clarify the concept of relative
poverty. It refers to the relative share of income accruing to the working class.
Relative poverty is concerned with the inequality in distribution of income. A study
on wage differentials has shown that forty percent of the lowest earner gets only
sixteen percent of the total national income whereas the share accruing to the top
twenty percent of high income earners is as high as fifty- two percent of the total
national income.
Thus in the present condition, a rational wage policy must effectively deal with the following components:
• Fixing minimum wages

• Fixing ceiling in wage incomes
• Wage structure
• Price stability
There is a need to fix the minimum wage which in the absence of a Central directive
may be very low. Thus there is a need for policy to provide a wage which would be
necessary for the fulfillment of subsistence level needs. The protection of workers
against exploitation or unduly low wages has been wage policy’s major preoccupation in any underdeveloped
country.
Objectives
• To provide for Minimum wages for certain employees

• To stop exploitation of labour
• The acts also provides for maximum daily hours, weekly rest day and overtime
This policy establishes the general bargaining framework that is to apply for all public
sector wage negotiations. The framework clarifies the roles and responsibilities of key
stakeholder agencies, and establishes the approved negotiating parameters to be
observed. The Government seeks to achieve public sector wage outcomes that are
industrially and economically sustainable, and reflect Government priorities.
Article 39
There is equal pay for equal work for both men and women;
Article 43
Living wage, etc., for workers- The State shall endeavor to secure, by suitable legislation or economic organisation
or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work
ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities and, in
15

particular, the State shall endeavour to promote cottage industries on an individual or co-operative basis in rural
areas.’
As of now, India does not have a formal national wage policy, though the issue has been discussed several times.
The government has direct and indirect control over wage levels, which has been exercised through different
institutions.
(Top salaries of PSU’s and Private Sector are strictly regulated, though the degree has been diminishing,
particularly in Private Sector - This has led to phenomenal differentials between Private and Public
The Government seeks to achieve public sector wage outcomes that are industrially and economically sustainable,
and reflect Government priorities.
This is given effect by:
a) Maintaining the real value of wages by increasing wages by an amount equivalent to the projected growth in
the Perth Consumer Price Index (CPI), as published from time to time by the Department of Treasury and
Finance.
b) Requiring any increases above projected CPI growth to be linked to improved efficiency / work practice reform
initiatives, assessed on a case-by-case basis by the Economic and Expenditure Reform Committee (“EERC”)
and included within the proposed agreement. The business case for wage increases in excess of CPI growth
must be justified by quantitative assessments of the value of improved efficiency / work practice reform
initiatives where this is feasible.
c) Capping total wage increases (incorporating both projected CPI and any additional amount for improved
efficiency / work practice reform initiatives) at an amount equivalent to projected growth in the WA Wage
Price Index (WPI) for all sectors, as published from time to time by the Department of Treasury and Finance.
Wage increases in agreements should:
• be expressed as percentage increases;

• be payable from the “first pay period beginning on or after” key dates; and
• not be linked to external variables that cannot be determined at the time of registration, including minimum and
award wage case decisions.
Pay revision of CPSE executives from Jan 1, 2007 cleared
The Union Cabinet today approved the revised pay package for executives of Central Public Sector Enterprises
(CPSEs) from January 1, 2007.
''The revised pay scales will be implemented by issue of presidential directive in respect of each CPSE separately
by the ministry or department concerned,'' Minister of State in the PMO Prithviraj Chavan told reporters.
The payment of HRA perks and allowances based on revised scales will, however, be from the date of issue of
presidential directive.
The decision, based on the recommendations of the 2nd Pay Revision Committee and approved by the Committee
of Secretaries, will be applicable to Board level executives, below Board level executives and non-unionized
supervisors.
The expenditure on account of pay revision has to be borne entirely by the CPSEs, out of the earnings and therefore,
no financial outgo from the Government on account of pay revison is envisaged.
16

An Anomalies Committee, consisting of secretaries of Department of Public

Enterprises, Department of Expenditure and Department of Personnel and Training,
will be constituted to look into further specific issues that may arise in the
implementation.
Mr Chavan clarified that the decision on the pay revision was being announced after
clearance from the Election Commission in view of the prevaling model code of
conduct
By The Government-
• fixing minimum wages

• Provide for a paid rest day in every period of 7 days
• The minimum wages rates will be different for different classes of employeesskilled, semi skilled, unskilled
17

5. Describe the objectives of privatization and explain to what extent it has Succeeded in achieving these
objectives.
Privatization is the incidence or process of transferring ownership of a business,

enterprise, agency or public service from the public sector (the state or government) to
the private sector (businesses that operate for a private profit) or to private non-profit
organizations. In a broader sense, privatization refers to transfer of any government
function to the private sector - including governmental functions like revenue collection and law enforcement.
The term "privatization" also has been used to describe two unrelated transactions. The first is a buyout, by the
majority owner, of all shares of a public corporation or holding company's stock, privatizing a publicly traded stock,
and often described as private equity. The second is a demutualization of a mutual organization or cooperative to
form a joint stock company.
Objectives of Privatisation
The emphasis is on improving the efficiency of all Parastatal enterprises, whether retained or divested. The
Government has decided to distance itself from direct involvement in business, and thus to divest most of its
interests whether in loss making or in profit making Parastatal enterprises. All commercial Parastatal enterprises
will become available for both foreign and local participation using suitable methods of divestiture including
liquidation where necessary.
Primary Objectives:
The following are the primary objectives which have been defined in the Government’s policy statement on
Parastatal Sector Reform:
• Improve the operational efficiency of enterprises that are currently in the Parastatal sector, and their
contribution to the national economy;
• Reduce the burden of Parastatal enterprises on the Government budget;
• Expand the role of the private sector in the economy, permitting the Government to concentrate
public resources on its role as provider of basic public services, including health, education and social
infrastructure; and
• Encourage wider participation by the people in the ownership and management of business.
In pursuing these primary objectives the CHC aims to:
• Transform, through commercialization, restructuring and divestiture, the performance of most significant
enterprises in the Parastatal Sector; and
• Ensure liquidation of all non-viable Parastatal enterprises as soon as possible.
Secondary Objectives:
In so far as their pursuit is consistent with the primary objectives, the CHC intends to ensure that divestiture meets
the following secondary objectives:
• to create a more market-oriented economy;
• to secure enhanced assess to foreign markets, to capital and to technology;  to promote the
development of the capital market; and
• to preserve the goal of self-reliance.
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Likewise the process of commercialization and restructuring will be designed so as to ensure that those Parastatals
that remain for the time being in the public sector:
• are responsive to markets, cost-conscious and profit oriented;
• act as business entities without being required to carry out non commercial;
• activities except when explicitly compensated by Government;
• do not encounter political interference in their operations including the banks;
• are guided by supervisory agencies to the minimum consistent with pursuit of consumers’ interests;
• have boards and managements that are autonomous and accountable; and
• have effective performance monitoring systems.
Given these objectives the Parastatal sector reform programme is expected to:
• increase private sector savings and investment (both local and foreign) in all sectors of the economy which,
in turn, will stimulate sustainable employment opportunities;
• increase tax collection from businesses that become more profitable after privatisation;
• create an environment that will encourage private investment and the emergence of indigenous
entrepreneurs; and improve the quality of delivery of utility and other public services
Succeeded in achieving these objectives
• Improve performance: The main aim of privatization is to improve the performance of the banks. When
ownership is in private hands, they work for profit and try to improve the performance.
• Promote competition: Due to lack of competition, the banks were not attending to the services they
provide to depositors. The purpose of privatization of banks is to promote competition.
• Reduce burden of government: The most important factor of privatization is that these banks had been
an extra burden on government. The privatization of banks reduces the burden of the government. It is in
the interest of the country to sell banking business to private persons.
• Increase the process of industrialization: The sale of banking business to
private owners is helpful in increasing the process of industrialization because
the banks extend credit for setting up industrial unit in different parts of the
country.
• Promote capital market: When the shares of privatized banks are soled to general public, the capital
market become strong due to increase in number of shares in stock market.
• Service motives: Due to the nationalization, the service motive was decreased instead of increasing.
Workers do not care for any depositor. The purpose of privatization was to increase the service motive
19

6. Write short notes on the following:-

a) Retraining
Vocational rehabilitation or retraining is the process of learning a new skill or trade, often in response to a change in
the economic environment. Generally it reflects changes in profession rather than an "upward" movement in the
same field.
There is some controversy surrounding the use of retraining to offset economic changes caused by free trade and
automation. For example, most studies show that displaced factory workers in the United States on the average have
lower wages after retraining to other positions when a factory is closed due to offshoring. A similar issue surrounds
movement from technical jobs to liaison jobs due to offshore outsourcing. Such changes may also favor certain
personality types over others, due to the changing tasks and skills required.
Retraining is sometimes offered as part of workfare programs, which may include support for transportation,
childcare, or an internship..
If you already work fulltime, chances are you don't have a lot of time to devote to
learning new skills, or updating your old skills. While learning something new can
take some additional time and effort, it is usually worthwhile to add some new
skills to your resume, and to increase your value to your current employer.
Following are 5 reasons you should consider adding additional skills to your repertoire, or retraining to learn
something new:
1. Add to your existing skill set. If you are already employed, adding to your
existing skills can make you more valuable to your employer. Not only will the
additional skills you learn make it likely that you can take on more responsibilities
at work, retraining shows that you are constantly evolving and improving as an
employee. You can also point out any retraining that you have done when it is time
to review your performance. You may be able to justify a raise if you have added significant skills or certifications
to your resume.
2. Train for a new job altogether. Whether you simply dislike the career or position you are in, or you are working
in an industry that is in decline, you may wish or need to seek additional opportunities. Retraining for a separate
career will allow
you to learn something new, and allow you to apply for and be qualified to perform a different set of jobs. If you are
in an industry that is declining or changing, chances are you will be competing against others from your same field
for the same jobs, and retraining can give you an additional advantage.
3. Keep up to date on the latest technology. If you have been out of school for three, five, or even ten years,
technology has changed substantially since you graduated. You may need to attend a program or take a course to
catch up a bit. By being on top of the latest technology and techniques, you can be sure that you are not missing out
on anything. If you work for an employer, they will appreciate you upgrading your skills-and may even pay
for the training itself.
4. If you have been laid off, or let go from your last position. Look at a layoff or termination as an opportunity. If
you are eligible to receive unemployment
benefits, you can use some of your down time to retrain for a new position. It is easy to get stuck in a job, simply
because you are accustomed to it. Getting laid off or terminated can give you the push you need to try
something new.
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5. You sense a layoff is coming. If you are in a declining industry or many employees from your company have
been laid off, be proactive and start retraining now. If you do not end up getting laud off, you will have increased
your skills, and will benefit from the new training. If you do end up getting laid off, then you will have a significant
head start on finding another job.
b) Board for Industrial and Financial Reconstruction (BIFR)
Brief Introduction of BIFR and its functioning
Board for Industrial and Financial Reconstruction (BIFR)
The Government of India, in order to tackle the problem of industrial sickness, had set
up a Board for Industrial and Financial Reconstruction (BIFR), under the purview of Sick Industrial Companies
(Special Provisions) Act,1985 (SICA). It had been established as a quasi-judicial body in the Department of
Economic Affairs, Ministry of Finance, for revival and rehabilitation of potentially sick undertakings and for
closure/liquidation of non-viable and sick industrial companies.
The Industrial Finance Division of the ministry dealt with the appointment of the
Chairman and the Members of BIFR and Appellate Authority for Industrial and
Financial Reconstruction (AAIFR) as well as with all the other matters relating to
industrial sickness.
Under SICA, it is mandatory for the Board of Directors of a sick industrial company
to make a reference and report to BIFR for formulation of revival and rehabilitation
schemes and other remedial measures to be adopted with respect to such a company.
BIFR, since its inception in May 1987 till the end of September 2006, has received
6,991 references
BIFR will conduct an inquiry and ascertain whether the company is indeed sick or not. For this purpose, the Board
may, through any operating agency, cause to prepare with respect to the sick company:-
• A complete inventory of that company which includes all assets and liabilities as well as all books of
accounts, registers, maps, plans, records, documents of title or ownership of property and all other
documents of whatsoever nature relating thereto;
• A list of shareholders and of creditors (showing separately the list of secured creditors and unsecured
creditors);
• A valuation report in respect of the shares and assets of the company;
• An estimate of its reserve price, lease rent or share exchange ratio; and
• Performa accounts, where no up-to-date audited accounts are available.
On the basis of such an enquiry, if BIFR is convinced that the company has become
sick, it will either give reasonable time to the company concerned to make its net worth positive or it will appoint an
operating agency consisting of certain banks and financial institutions to prepare a package for the revival of such
sick industrial units. The package may consist of any one or more of the following measures:-
• Restructuring the capital base of the company.

• Inducting more capital to improve its resource position.
• Merger and amalgamation of the sick company with a healthy unit.
• Providing soft loans to the company.
21

• Bringing about technological changes and modernisation in the company.

• Bringing about a change in its management
• Writing off the interest burden of the company. Rescheduling its loans.
• Providing fiscal concessions like tax rebate, tax exemptions or tax relief’s to it.
If BIFR is of the opinion that the sick industrial company is not likely to make its net
worth exceed its accumulated losses within a reasonable time and that it is not likely
to become viable in future and also it is just and equitable that the company should
wound up, it could imitate proceedings with the High Court, for winding up of the
company.
The decision of the BIFR is binding on all the concerned parties. The entire responsibility for diagnosing,
identifying, investigating, rehabilitating, reviving and ultimately recommending the winding of such a sick unit lies
with the BIFR. Along with it, certain measures may also be initiated by the Reserve Bank of India (RBI) by
instructing banks to keep a constant track of borrower's profile and try to identify sickness at the initial stages, that
is, when a unit has started becoming weak. It has issued detailed guidelines for rehabilitation of these units and
matters relating to better coordination between commercial banks and term-lending institutions for formulation and
implementation of rehabilitation programmes.
But, under the Sick Industrial Companies (Special Provisions) Repeal Act, 2003,
which replaced Sick Industrial Companies (Special Provisions) Act,1985 (SICA),
the Board for Industrial and Financial Reconstruction (BIFR) and Appellate
Authority for Industrial and Financial Reconstruction (AAIFR) stand dissolved. The
work of revival and rehabilitation has been entrusted to National Company Law
Tribunal (NCLT) in place of BIFR and any appeal against the order of the NCLT will
be made to the National Law Appellate Tribunal (NCLAT) instead of AAIFR.
The institutional structure relating to NCLT/NCLAT has been provided under the Companies (Second)
Amendment 2002. According to the Act:-
• The Central Government shall, by notification in the Official Gazette, constitute a Tribunal to be
known as the National Company Law Tribunal to exercise and discharge such powers and functions as are,
or may be, conferred on it by or under this Act or any other law for the time being in force.
• The proposed NCLT shall continue the functions and powers currently discharged by the Company Law
Board, the BIFR and the High Courts in respect of liquidation, winding up, amalgamation and merger of a
sick unit.
• It shall consist of a President and such number of Judicial and Technical Members not exceeding sixty-
two, as the Central Government deems fit, to be appointed by that Government, by notification in the
Official Gazette.
• Under the Act, the Board of Directors of a sick company shall make a reference to the NCLT and prepare a
scheme of its revival and rehabilitation and submit the same to the Tribunal along with an application
containing such particulars as may be prescribed, for determination of the measures which may be adopted
with respect to such a company. The application shall be accompanied by a certificate from a panel of
auditors approved by the Tribunal indicating the reasons for the net worth of the company becoming fifty
per cent or less; or for default in repayment of its debt making such company a sick industrial company, as
the case may be.
• If the Tribunal, after considering all the relevant facts and circumstances, is of
the opinion that the sick industrial company is not likely to make its net worth exceed the accumulated
losses within a reasonable time while meeting all its financial obligations and that the company is not
22

likely to become viable in future and that it is just and equitable that the company should be wound up,
then it may order winding up of the company.
In the wake of sickness in the country’s industrial climate prevailing in the eighties,
the Government of India set up in 1981, a Committee of Experts under the
Chairmanship of Shri T.Tiwari to examine the matter and recommend suitable

remedies therefore. Based on the recommendations of the Committee, the Government of India enacted a
special legislation namely, the Sick Industrial
Companies (Special Provisions) Act, 1985 (1 of 1986) commonly known as the SICA.
The main objective of SICA is to determine sickness and expedite the revival of potentially viable units or closure
of unviable units (unit here in refers to a Sick Industrial Company). It was expected that by revival, idle investments
in sick units will become productive and by closure, the locked up investments in unviable units would get released
for productive use elsewhere.
The Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter called the
Act) was enacted with a view to securing the timely detection of sick and potential
sick companies owning industrial undertakings, the speedy determination by a body
of experts of the preventive, ameliorative, remedial and other measure which need to
be taken with respect to such companies and the expeditious enforcement of the
measures so determined and for matters connected therewith or incidental thereto.
The Board of experts named the Board for Industrial and Financial Reconstruction (BIFR) was set up in January,
1987 and functional with effect from 15th May 1987. The Appellate Authority for Industrial and Financial
Reconstruction (AAIRFR) was constituted in April 1987. Government companies were brought under the purview
of SICA in 1991 when extensive changes were made in the Act including, inter-alia, changes in the criteria for
determining industrial sickness.
SICA applies to companies both in public and private sectors owning industrial undertakings:-
(a) pertaining to industries specified in the First Schedule to the Industries (Development and Regulation)
Act, 1951, (IDR Act) except the industries relating to ships and other vessels drawn by power and;
(b) not being "small scale industrial undertakings or ancillary industrial undertakings" as defined in Section 3(j) of
the IDR Act.
(c) The criteria to determine sickness in an industrial company are (i) the accumulated
losses of the company to be equal to or more than its net worth i.e. its paid up capital
plus its free reserves (ii) the company should have completed five years after incorporation under the Companies
Act, 1956 (iii) it should have 50 or more workers on any day of the 12 months preceding the end of the financial
year with reference to which sickness is claimed. (iv) it should have a factory license.
c) Voluntary Retirement Scheme (VRS)
Voluntary Retirement Scheme (VRS)
In the present globalised scenario, right sizing of the manpower employed in an

organisation has become an important management strategy in order to meet the
increased competition. The voluntary retirement scheme (VRS) is the most humane
technique to provide overall reduction in the existing strength of the employees. It is a
technique used by companies for trimming the workforce employed in the industrial
unit. It is now a commonly method used to dispense off the excess manpower and
thus improve the performance of the organisation. It is a generous, tax-free severance
payment to persuade the employees to voluntarily retire from the company. It is also
known as 'Golden Handshake' as it is the golden route to retrenchment.
23

In India, the Industrial Disputes Act, 1947 puts restrictions on employers in the
matter of reducing excess staff by retrenchment, by closures of establishment and the
retrenchment process involved lot of legalities and complex procedures. Also, any
plans of retrenchment and reduction of staff and workforce are subjected to strong
opposition by trade unions. Hence, VRS was introduced as an alternative legal
solution to solve this problem. It allowed employers including those in the government undertakings, to offer
voluntary retirement schemes to off-load the surplus manpower and no pressure is put on any employee to exit. The
voluntary
retirement schemes were also not subjected to not vehement opposition by the
Unions, because the very nature of its being voluntary and not using any compulsion.
It was introduced in both the public and private sectors. Public sector undertakings,
however, have to obtain prior approval of the government before offering and
implementing the VRS.
A business firm may opt for a voluntary retirement scheme under the following circumstances:-
 Due to recession in the business.

 Due to intense competition, the establishment becomes unviable unless downsizing is resorted to.
 Due to joint-ventures with foreign collaborations.
 Due to takeovers and mergers.
 Due to obsolescence’s of Product/Technology.
Though the eligibility criteria for VRS varies from company to company, but usually,
employees who have attained 40 years of age or completed 10 years of service are
eligible for voluntary retirement. The scheme applies to all employees including
workers and executives, except the directors of a company. The employee who opts
for voluntary retirement is entitled to get forty five days emoluments for each completed year of service or monthly
emoluments at the time of retirement multiplied by the remaining months of service before the normal date of
service, whichever is less. Along with these benefits, the employees also get their provident fund and gratuity dues.
Compensation received at the time of voluntary retirement is exempt from tax under section 10 (10C) of the Income
Tax Act, 1961 up to the prescribed amount upon fulfilling certain stipulated conditions. However, the retiring
employee should not be employed in another company or concern belonging to the same management
A company may make the following announcements while implementing a voluntary retirement scheme:-
 The reasons behind downsizing the organisation.

 The eligibility criteria for voluntary retirement scheme.
 The age limit and the minimum service period of employees who can apply for the scheme.
 The benefits that are offered to the employees who offer to retire voluntarily.
 The rights of the employer to accept or reject any application for voluntary retirement.
 The date up to which the scheme is open.
 The income tax benefits and income tax incidence related to the scheme.
 It should also indicate that the employees who opt for voluntary retirement and accept the benefits under
such scheme shall not be eligible in future for employment in the organisation.
Voluntary Retirement Schemes have been legally found to be giving no problem to employers, employees and their
unions. But, the retrenchment plans of an organization must be compatible to its strategic plans. Its procedure and
reasons for introduction must be discussed with all management staff including top management. One need to
identify departments or employees to whom VRS is applicable and thereby formulate its terms and conditions and
also state the benefits that would be available to those who took VRS. Such information should be made available
to every employee of the organization, mentioning the period during which the scheme will be open. Also, existing
employees might face insecurity because of fear of losing their job too. One of the possible drawback of the VRS is
that the efficient employees would leave the company while the inefficient may stay back. Thus it is the
/responsibility of the employer to motivate them and remove their apprehensions and fears
24

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MS -92 -Management of Public Enterprises

OBJECTIVES: The public sector aims at achieving the following objectives:

• To promote rapid economic development through creation and expansion of infrastructure

3. Balanced Regional Development: Public sector undertakings have located their

4. Contribution to Public Exchequer: Apart from generation of internal resources

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periods 2002-03 to 2004-05 the contribution increased by Rs 81,438 crores on the

5. Export Promotion and Foreign Exchange Earnings: Some public enterprises

6. Import Substitution: Some public sector enterprises were started specifically to

Causes for the expansion of public enterprise

At the time of independence, India was backward and underdeveloped - basically an

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5. Socialistic Pattern of Society: The socialistic pattern of society envisaged in the

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Approaches and the Role of Accountability

A Political accountability versus managerial accountability, e.g. can they be separated

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Accountability Across Levels of Government

À Conflicts between compliance accountability and managerial autonomy and effects

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3. Critically examine the performance evaluation of Railways in the present

Indian Railways’ Vision 2020

A White Paper indicating the Railway’s present organizational, operational and

Unprecedented thrust on safety related issues

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Implementation of dedicated freight Projects

As a follow up to the announcement made by the Minister of Railways Kumari

Air conditioned Yuva trains for unemployed youth

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Only Ladies Special EMU Train Services

Super Fast Parcel Express Trains

Development of Private freight terminals

Perishable Cargo Centres under Kisan vision Projects

375 Stations to be developed as “ ADARSH “ Stations

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Development of Multi-functional Complexes

Provision of Quality Foods in Trains

Improvement and modernisation of Signalling System

Importing communication sytsem on Railways

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Setting up of new ancillary units for diesel and electric locos

Izzat monthly season ticket scheme launched

Expert Committee for Developing Business Models and innovating Funding

Railways Launch Historic Non Stop Duronto Trains

Transportation of drinking water and Fodder free of cost to draught affected

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Dream of Kashmir Valley People Fullifillled

First Ever Rail link with sikkim

Implementation of integrated Security system on Railways

Railways have taken several measures to strengthen security activities. An amount of

Introduction of mobile bridge inspection units

Railways Bags four energy conservation Awards

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IRTC Launches Toll Free 24*7 Helpline

As announced by the Minister of Railways, Kumari Mamata Banerjee in the Railway

Introduction of E- Procurement System (EPS)

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Revamping of railways recruitment boards

Innovative steps taken for better medical care

Introduction of Luxury Tourist Train.