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Andhra-Telangana PSU split: Same yardstick may not work for all

A year after the bifurcation of Andhra Pradesh, all eyes are now on how the assets of the 90 public sector units will be divided between the two states.

twitter-logo E Kumar Sharma        Last Updated: June 10, 2015  | 08:54 IST

E Kumar Sharma, Associate Editor
A year after the bifurcation of Andhra Pradesh, all eyes are now on how the assets of the 90 public sector units will be divided between the two states.

This challenging task is being handled by the Sheela Bhide Committee, which has been set up for this purpose. Considering that Bhide is a former bureaucrat of the Andhra cadre who knows both the regions well, the committee is surely well-equipped to handle the matter.

However, the committee is going strictly by the Andhra Pradesh Reorganisation Act and provisions laid down under it to divide the assets and liabilities of the 90 PSUs listed by it. To this, the committee has added what its members like to call "principles of fairness, logic, consistency, transparency, and being legally defensible."

Consider what the Act says: "the assets and liabilities of (a) the operational units of the undertaking shall be apportioned between the two successor States on location basis; and (b) the headquarters of such undertaking shall be apportioned between the two successor States on the basis of population ratio." The population ratio, in relation to Andhra Pradesh and Telangana, is 58.32: 41.68 as per the 2011 Census, with the former the share of Andhra and latter of Telangana .

Now, this may be fair in some cases but as all students of economics and management would know, a purely arithmetic formula to divide the assets and liabilities may not work in all cases.

A seasoned economist, who preferred not to be identified, said, "while bifurcating a PSU (public sector unit), it is important to look at the economics and relevance of each individual PSU for there could be some PSUs that could be more relevant to one region and few others relevant more to the needs to the other region."

Using a rule-of-thumb formula with an aim to remain consistent and follow the same yardstick for all PSUs would seem more like an administrative way of dealing with the issue. It could work in some cases like for instance, the state road transport corporation. Here, for example, it may be possible to divide the number of buses between the two states based on the population but this may not work for manufacturing units or those that are resource-linked. There may be need to look at levels of development, demand and few other economic parameters.

 

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