ISSUES REGARDING THE PUBLIC SECTOR THAT NEED PUBLIC DEBATE 5? In the absence of any policy—capital goods policy, drug policy, shipping policy, etc., which emphasizes indigenous effort both in technological and manufacturing endeavours it seems a misplaced emphasis to talk of productivity and profits. Let us examine the case of the ship building industry. While the public sector ship building industry was hard hit by recession, in 1977 the Government initiated a new scheme called Ship Acquisition From Abroad. Under the new scheme (Called SAFAUNS) subsidized credits to the tune of Rs. 500 crores and guarantees worth an equal amount or even more for buying ships from foreign shipyards, which were facing a serious crisis, was extended to the Indian ship owners. Thus the Indian Government through the Shipping Committee was helping the foreign shipyards through liberal loan schemes. It is quite obvious that such a distorted policy, favouring foreign companies, effectively prevented the growth and development of our own ship building industry. Under these circumstances it seems a misplaced priority to discuss profits and productivity of the Indian ship building industry in exclusion of the policy framework. The Question of Public Sector Profits Much is said about profits. Nobody in his right mind can deny the importance of profit for a commercial undertaking. However, there is no case for making profit a measure of the efficiency or health of the public sector, on the whole, or in terms of a unit. A more fundamental question arises in the case of the public sector and that is that, unlike private acquisition of wealth, public sector profits cannot be distingushed from tax. After all the amount charged for a litre of petrol in the market, by virtue of administered prices, has no bearing on the cost of crude or the cost of processing and transporting the refined products. There is no reason why the residue between the selling price and the cost of production including transport, cannot be wholly treated as a profit or as a tax. To quote B.P. Schumacher, 'The nationalised enterprises are somehow expected never to charge more than the cost of production and also to show a substantial profit at the end of the year.59 The question that needs to be answered is ; should the Food Corporation make the same margins of profits as the ONGC ? Can DTC, which is the lifeline of the people of Delhi, be run on purely profit motivation. Lastly, if BHEL makes a large profit by implication it means that the State Electricity Boards would be paying more for the turbines. Either the Electricicity Boards should increase the tariff of electricity or make losses. Electricity has an overall multiplier effect of 10 ; the consequence of a higher electricity tariff on the economy can well be assessed. What is more important is the enormous time and energy spent in the pretence of commercial organization. There is no reason why, for example, BHEL and the Electricity Boards cannot dispense with the formality of tendering and jointly evolve the specifications. Based on these specifications the equipment can be transferred, at