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    HomeBusinessLetters to the Editor dated June 3, 2022

    Letters to the Editor dated June 3, 2022


    With reference to the editorial ‘Reimagine disinvestment’(June 3), though the PSUs have played a key role in generating jobs, by and large, they shown weak efficiency in operations and margins.

    While the major part of the equity is from the exchequer, each PSU is bound to pay the government a reasonable dividend, but in many cases, the government is a loser.

    The funds which could be used for for welfare, social security and development have been invested as equity in the non-performing PSUs and therefore needs to be disinvested.

    It is not worthwhile to keep on infusing capital into inefficient public enterprises.

    However, the government as a majority stakeholder must refrain from selling the stakes at a time when the capital market is unfavourable.

    At the same time the government cannot delay the disinvestment programmes as sale proceeds can be used to boost growth.

    VSK Pillai


    Revisit disinvestment

    This refers to Editorial ‘Reimagine disinvestment’(June 3). Given the patchy disinvestment record of the government the whole policy of selling stakes in PSUs needs a revisit. The paucity of reasonable buyers and the depressed state of the markets are the key reasons for the government failing to achieve the divestment target.

    The government could look at improving the governance at PSUs and boost their profitability.

    NR Nagarajan


    Centre’s right move

    Apropos ‘Govt will ensure hoteliers toe the line on service charge norms’ (June 3), the Centre is absolutely correct in taking a decision on service charges being charged by some restaurants in the country. Why should the hotel industry should tax the consumers this way when already the consumers are paying GST differently to them?

    The contention of the industry that it is being charged abroad does not hold water as economies and lifestyles there are markedly different.

    Not only this, the industry has already accounted for all the factors while deciding on prices and hence they cannot squeeze “service charges” from the consumers.

    The nomenclature differs from place to place and the purpose of utility, further adding service charges by hotels should not be allowed at any cost.

    Katuru Durga Prasad Rao


    Capital intensity

    This is with reference to “Rising capital intensity and household sector”, (June 2). An analysis of the capital-to-labour ratio by major sectors of the economy reveals substantial heterogeneity in sectoral trends.

    The capital intensity has moved over a narrow stage. It has increased in mining, construction and road transport. The value of output has shown a declining trend in household sector.

    The increase in this intensity is greater for sectors like mining, construction.

    Informal household sector is also characterised by a higher ratio of value added to value of output.

    Financial assets and net worth of the household sector declined by about 5 per cent.

    An analysis of the capital-to-labour ratio by major sectors of the economy documents substantial heterogeneity in sectoral trends. The evidence is circumstantial, but it is consistent with the hypothesis that education-intensive sectors of the economy are not flowing with the economy’s trend towards capital intensity.

    The two education-intensive sectors of the economy — financial services and trade — are growing more rapidly but without significant increases in capital intensity, and they are creating jobs.

    The sectors that are not education-intensive — namely mining, construction and manufacturing — are growing more slowly or contracting even as their capital intensity increases, and they are shedding jobs.

    If productivity growth is labour augmenting and labour cannot be readily substituted for capital, more investment can lead to job losses, even as the economy grows.

    P Sundara Pandian

    Virudhunagar (TN)

    Published on June 03, 2022

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