SOME CAUSATIVE FACTORS OF POOR PERFORMANCE OF GOVERNMENT OWNED FIRMS IN INDIA.

The article presents information on some causative factors of poor performance of government owned firms in India. Government owned firms in India have been severely criticized because of their relatively poor economic and financial performance in comparison to the privately owned firms in the country. The purpose of this paper is to search and analyze the predominant reasons for the poor performance of government owned firms, and to recommend measures that could alleviate problems confronting government owned firms. Government owned enterprises in India are organized along three main organizational patterns. They are, governmental department organization, the public corporation, and the company form. This paper limits its coverage to firms using either the public corporation or the company form of organization. Further, this paper is mainly concerned with the analysis of factors responsible for problems confronting the top managements of government owned firms. Ministerial interference, in-effective board of directors, a managing director whose authority scope is severely trimmed by representatives of the finance ministry on the board of directors, absence of professional management and dynamic, creative leadership, are some of the major top management problems presently confronting the government owned firms in India. Government owned firms in India need greater autonomy and freedom from frequent governmental interference. They also need a board of directors that is effective in performing its traditional functions, and a managing director who has the authority and leadership qualities to have his ideas and decisions accepted by the board of directors above him and by the organization reporting to him.