Undertaking a project completion study of the West Bengal public sector enterprise programme

Project:
Undertaking a project completion study of the West Bengal public sector enterprise programme
Making recommendations for the next phase of DFID's West Bengal PSE Reform Programme

Public sector enterprise reform and privatisation in India has been a controversial issue, more so than in many other countries. In West Bengal, a state with a strong political base for the Communist Party of India, the process has been highly political.

In 2006, we were contracted by the Department for International Development to undertake a review of Phase I of its public sector reform programme in the state, to document the programme’s experience so far, gauge its fiscal impact and inform the design of Phase II. Our team was chosen to review Phase I because of our excellent record and political acumen in implementing public sector enterprise reforms in other states in India, particularly in Orissa, Madhya Pradesh and Andhra Pradesh.

We made a number of key recommendations for Phase II of the project, including ensuring that all activities from Phase I (such as the disposal of closed enterprises) were fully complete, establishing a core restructuring unit headed by the Secretary of Public Enterprises Department, considering the wider context, including environmental issues and the contextual role of public sector enterprises in the rest of West Bengal.

Furthermore, we recommended both the writing of a restructuring manual setting out comprehensive and transparent procedures, and a restructuring action, sequencing and timetable plan to set out the sequence of actions to be taken. We also recommended continuing the high intensity dialogue with stakeholders that had occurred under Phase I as the best way of ensuring continued full understanding, minimising negative effects of the reforms on employees.

The work was appreciated by DFID, and our recommendations formed a key input into their design of Phase II of the public sector enterprise reform programme, particularly those recommendations addressing the institutional and capacity shortcomings in Phase I.