It is heartening to note that out of the world’s 2000 largest companies, figured in Forbes Global 2000, and their 3,30,000 subsidiaries worldwide characterizing their influence in the global market, as many as 30 are India’s much neglected and criticized State-owned enterprises (SOEs). India’s SOE numbers are only next to the People’s Republic of China’s. The People’s Republic of China had 70 of its SOEs in the Forbes Global 2000 list. The Forbes study makes a stunning exposure of the SOEs, which are often characterized in India as ‘incompetent’ and ‘uncompetitive’, that over 10 per cent (204) of the world’s top 2,000 companies are state run. They came from 37 countries and accounted for a combined sales income of $3.6 trillion in 2011 – more than the GDP of such super-rich G-7 countries as Germany, France and the United Kingdom.
To identify state-owned enterprises among top global firms, Forbes uses firm-level ownership data and take into account both direct and indirect ownership links. Corporate entities are identified as state-owned enterprises if the state owns, directly or indirectly, over 50.01 per cent of shares at the national or sub-national level, and they operate as public companies listed with stock exchange. Obviously, the list does not cover SOEs that are not public. While this means that many of the large unlisted SOEs will not be covered (e.g. unlisted statutory enterprises, in postal services for instance, or utilities at sub-national level), this augmented dataset provides comparable information on SOEs that are most active in global trade and investment. There is one lacuna in this type of exercise though Forbes analysts can’t be faulted for that. This with regard to ‘invisible’ state holding in enterprises, especially in countries such as in Europe, Canada, Australia and, even, in the United States, through the cobwebs of crossholdings through trusts and state-promoted and patronized financial institutions. The corporate cross-holding mystery is never easy to uncover and Forbes, rightly, chooses the easy transparent path to identify SOEs for the purpose for its study.
China, the world’s largest and predominantly centrally-controlled economy, boasts the largest number of SOEs influencing markets across the globe. It is followed by India (30), Russia and United Arab Emirates (nine each). Others have smaller numbers. The combined value of sales by these stock market listed SOEs amounted to almost six per cent of the world GDP and higher than global value added in agriculture by a factor of 1.4 or combined FDI flows around the globe by a factor of 2.5. Their market value corresponded to 11 per cent of the market capitalisation of all listed companies worldwide. The global importance of Brazil, China, India, Indonesia, Russia and South Africa (BRIICS) is manifested in the number of companies from these countries that are among the largest in the world. Out of the 2000 largest companies, 260 are from the BRIICS countries. With China and India accounting for the majority of the SOEs, some 123, or 47 per cent. The market value of SOEs amounts to 32 per cent of gross national income among all the BRIICS. With the exception of South Africa, which has only two SOEs in the Forbes list, the SOEs control relatively large amounts of assets in the BRIICS, with China, India and Russia leading the list.
Ironically, while the world talks about the success and importance of India’s SOEs, they are constantly scoffed at by India’s private sector and their cohorts in the powerful bureaucracy and media, which do not spare even a remote opportunity to condemn the country’s public sector as inefficient and want the government to privatize or sell them so that influential large family-run enterprises can cheaply gobble them up. The sale of SOEs like Indian Petrochemical Corporation (IPCL), a global leader in petrochemicals, Bharat Aluminium, India’s international telecom gateway Videsh Sanchar Nigam and leading railway wagon, passenger bogies heavy duty crane manufacturer Jessop & Co. may be cited as an example of the government’s mindless decision to privatize some of its invaluable assets. Unlike in advanced countries with a deep-routed corporate culture and strong nationalist feeling, India’s bureaucrats and some political executives treat the so-called departmental enterprises as their private properties and often use them to sub-serve their private purpose, summoning their aircraft and cars and use their hospitality for the entertainment of their families and guests. SOE management stays beholden to their “owners” and are subjected to “clearance from the top” — that is the government — for all strategic business decisions, including project site location and technology choice.
The business-bureaucracy-political nexus has considerably weakened India’s biggest telecom enterprises such as BSNL and MTNL to promote private sector dominance in telecommunications business, even at a national security risk, as the country’s top two companies in this strategic sector – Bharti Airtel and Vodafone – are effectively foreign companies. Few countries in the world have surrendered their strategic telecommunications assets to foreign players. The nexus has practically killed the very pride of India’s flag-carrier civil aviators – Air India and Indian Airlines. A mischievously enforced merger killed the potential of both the state-sector enterprises, leaving India’s airspace to be dominated by foreign airlines or foreign-funded airlines. Globally, civil aviation, like merchant marine operation, is treated as strategic business. Few countries are as charitable as India in allowing foreign controlled or foreign remote controlled carriers in domestic civil aviation. Remember the days when one was prohibited to take even a picture of our airports. Now, foreign pilots can take the geographical picture of the whole country and all its military installations using powerful cameras from the cockpit, draw the flight paths and get them transmitted to wherever they like.
Under such a stifling atmosphere, that the management teams of those 30 Indian SOEs that made to the Forbes Global 2000 deserves the nation’s salute for the world recognition for their contribution to its international trade, investment and wealth and employment generation. In fact, Indian SOEs are now everywhere – from freezing Siberia and Saskatchewan to the deserts of sub-Saharan republics and Pacific nations. Flying proudly the Indian flag are companies like ONGC, BHEL, OIL, IOC, NTPC, EIL, CIL, SAIL, HAL, SCI, PEC, etc., participating in projects across the world, contributing to global trade and earning billions of dollars annually from exports of their ‘Made-in-India’ capital goods, metals, mining, minerals, processed and down-stream products. It may be time that the enterprise-friendly nationalist Modi government frees these SOEs from the clutches of bureaucracy and departmental ministers to explore and perform to their true business potential at home and abroad.
(IPA Service)
