30. Advance Planning.-Planning, that is deciding in advance what is to be done, is a precondition for the success of an enterprise. It provides the basis for organisation, assembling resources. direction and control. An able manager is one who can say with an assurance based on detailed planning what products he would produce during the next month and the year, how many men and of what qualifications he would need and what would be the expense thereof, which materials and in what quantities would be required, what the spoilage would be and can state in similar specific terms the results he plans to achieve in other phases of his operation.
31. The plans for a given enterprise should fall into a hierarchy. A general objective is accompanied by a whole series of successively more detailed plans, each designed to implement the general plan of which it is a part. There have to be similarly gener- al plans for longer periods. say five years, annual operational plans and budgets and detailed day-to-day programmes of individual depart- ments.
32. The preparation of advance costs, operation and capital budgets will greatly reduce the need for making references to the administrative Ministry and strengthen the autonomy and flexibility of the enterprises. All enterprises, in their own interest, should, therefore, build suitable machinery for this purpose.
33. Advance planning provides an opportunity for seeing that each part fits in with the other and is directed towards the overall purpose. When bottlenecks or weak spots are uncovered by careful and realistic advance Planning, there is often time to find a remedy before the event occurs. whereas expensive breakdowns may be unavoid- able if corrective action is not initiated until overwhelmed by a crisis. Moreover, trouble is often more easily corrected in its early stages than after a crisis has developed. Thus, for example. preven- tive maintenance systematically
ORGANISATION OF PUBLIC ENTERPRISES 143
carried out avoids expensive repairs and replacements and shutting down of plants later. The existence of a detailed plan provides the impetus for developing more efficient methods and procedures and also facilitates delegation of authority.
34. Setting up of specific goals and subgoals is an inseparable part of the whole planning process. A wide variety of operating standards and 'norms' need to be set up to express the anticipated results of the more detailed plan. These may include norms for use of raw materials power and fuel inputs of labour; overhead expenses; targets of output, both in terms of quantity and quality; tasks for training, etc, Comparable data from other similar plants in the coun- try and outside are often found of value in this connection. An operational budget of the enterprise, carefully prepared from this point of view, could serve as the goal towards which all activities are directed. Many benefits follow from such practice. It makes purposeful and integrated planning easier; it helps the executive and the operators to concentrate on the essentials and contribute to the constant vigilance that is necessary to keep the enterprise from un- productive activities; the accumulation of operational data and norms useful for planning provides the basis for building. realistic pro- grammes in future; and, most important of all; the setting up of specific goals and norms is an essential condition for administrative control, that is, the securing of results in accordance with plans. Standards and norms are vital if appraisal is to have any validity. Also the recognition and acceptance of specific and clearly defined objectives and standards play an important part in the motivation of individual effort.
35. Incentives.-An enterprise which has worked realistic 'norms' of performance would find it easy to introduce systems of wage incen- tives, which play an important part in raising labour productivity, reducing costs and improving quality. These systems fall into three broad categories : (1) wages regulated on piece work, (2) a basic wage for an agreed output to which is added a bonus proportionate to addi- tional output, and (3) a bonus payable on the output of a group, each member of which draws a separate basic wage. The applicability of any system depends to a large extent on the specific situation of an enterprise and has to be worked out in relation to its requirements. All that can be said is that incentive wage system should be intro- duced on the largest possible scale for the mutual benefit of the workers anti the industry.
36. Research Departments.-It is necessary to maintain adequately staffed Research and Development Departments in the public undertak- ings which should constantly endeavour to improve the product quality and operational and technical efficiency through scientific studies. The recommendations of such departments should be implemented speedi- ly. Innovations and new ideas should be suitably rewarded and publi- cised.
There should be frequent exchange of technical and managerial experi- ence between different public enterprises so that all benefit from the common pool of experience. Inter-plant visits will be useful in this connection.
37. Personnel Relations.-The enterprises of the public sector have a special obligation to follow labour policies which are condu- cive to securing and keeping a competent working force at a reasonable cost. This requires a suitable wage policy with incentives, careful selection of personnel, organised training to improve the skills of workers at all levels, opportunities for workers to attain higher positions as their ability improves, active encouragement of workers to make suggestions to improve the operations of the enterprise and recognition of useful ideas by suitable rewards, a grievance procedure to settle small problems before they become large, and generally an attitude towards the workers which will encourage added effort and initiative and give the employees satisfaction, a sense of participa- tion and feeling of loyalty to the enterprise and pride for its achievement.
38. Surpluses and their utilisation.-When public enterprises run efficiently and follow a proper price policy for their goods and services, the results of their operations must be reflected in larger earnings and surpluses. In a developing economy, these constitute a ready and increasingly important source for financing investment either for the expansion of the enterprises which yield these sur- pluses or elsewhere in the economy. It is, therefore, incumbent on public enterprises to produce efficiently and to accumulate surpluses which should be earmarked for further development.
39. It is not enough for an enterprise to operate efficiently and carry out its assigned task satisfactorily. It must assume re- sponsibility for continuously improving its performance and for initi- ating and planning its growth and expansion. The management of a public enterprise should not merely carry out plans approved by Gov- ernment, but must in fact be closely concerned with and be largely responsible for preparing the plans for further development and for securing the requisite resources.
40. A brief review like the one attempted here must of necessity leave many gaps. It is not the purpose to prescribe detailed opera- tional recommendations for each enterprise but to touch upon some significant aspects to which greater attention needs to be given. Many of the enterprises in the public sector have already adopted policies and management techniques which have enabled them to produce remarkable results in relatively short time. The record of public enterprises, considering their relatively recent origin. is very creditable. The deficiencies of management to which attention has been drawn are as characteristic of enterprises in the private sector as in the public sector. Striving for constant improvement must be a common goal for all.
144 THIRD FIVE YEAR PLAN
ANNEXURE
List of major public enterprises of the Centre in the field of manufacturing and mining
[With authorised capital of Rs. 5 million and above]
Ministry/Enterprise year of
establishment
Commerce and Industry
1 Indian Drugs and Pharmaceuticals Ltd. 1961
2 Heavy Electricals Ltd. 1956
3 Heavy Engineering Corporation Ltd. 1958
4 Hindustan Antibiotics Ltd. 1954
5 Hindustan Cables Ltd. 1952
6 Hindustan Insecticides Ltd. 1954
7 Hindustan Machine Tools Ltd. 1953
8 Hindustan Organic Chemicals Ltd. 1960
9 Hindustan Salt Company Ltd. 1958
10 Nahan Foundry Ltd. 1952
11 Hindustan Chemical and Fertilisers Ltd. 1956
12 National Instruments Ltd. 1957
13 National Newsprint and Paper Mills Ltd. 1947
14 Sindri Fertilisers and Chemicals Ltd. 1951
15 Praga Tools Corporation Ltd. 1943
16 Hindustan Photo Films Manufacturing Company Ltd. 1960
Defence
17 Bharat Electronics Ltd. 1954
18 Prototype Machine Tool Factory* 1953
19 Hindustan Aircraft Ltd. 1940
Department of Automic Energy
20 Indian Rare Earths Ltd. 1950
Finance
21 Silver Refinery, Calcutta* 1952
Railways
22 Chittaranjan Locomotive Works* 1948
23 integral Coach Factory* 1952
Steel, Mines and Fuel
24 Hindustan Steel Ltd. 1953
25 Indian Refineries Ltd. 1958
26 National Coal Development Corporation Ltd. 1956
27 National Mineral Development Corporation Ltd. 1958
28 Neiveli Lignite Corporation Ltd. 1956
29 Singareni Collieries Company Ltd, 1920
30 Oil and Natural Gas Commission 1956
Transport and Communications
31 Indian Telephone Industries Ltd. 1948
32 Hindustan Shipyard Ltd. 1952
33 Hindustan Teleprinters Ltd. 1960
Works, Housing and Supply
34 Hindustan Housing Factory Ltd. 1953
* Departmental undertaking. ** Statutory corporation,
All others are companies registered under the Companies Act.