Krishnamurthy’s legacy

Recapturing the glory of the Indian public sector

Venkataraman Krishnamurthy, who died in Chennai aged 97, was among the last of the great public-sector managers who can credibly claim to have built India’s industrial backbone. In the 1970s and 1980s, he successively headed Bharat Heavy Electricals Ltd (BHEL), the Maruti project, and Steel Authority of India Ltd (SAIL). He also served in the Planning Commission, at the Indian Institute of Management, Ahmedabad, and the National Manufacturing Council. At BHEL, he oversaw the large-scale merger of multiple public sector entities flawlessly, something that public sector undertakings (PSUS) have struggled with subsequently. Krishnamurthy would not necessarily have described himself as a technocrat; he thought of himself as an engineer, a manager, but most of all as a “professional”. His passing thus is a moment for national reflection on how and why India’s public sector — although it remains a vital component of the national economy — is no longer the preserve of excellence, innovation, and, indeed, professionalism.

Part of the reason for this surely is that the broader pool of human resources available to the public sector in India has shifted. In the 1970s, a public-sector job was not just comparable to the private sector in terms of personal rewards, but provided a greater chance of being at the cutting edge of innovation and sectoral growth. When BHEL was formed, no other concern in India was likely to be able to master the technical processes and products that it chose. Krishnamurthy successfully persuaded not just Indian engineers but also foreign investors that PSUS were the location where growth and innovation could occur, as witnessed in his ability to bring and keep Suzuki on board in the small-car project. Unlike subsequent PSU executives, Krishnamurthy did not see his job as being the minion of some line ministry. In fact, he had to leave as secretary, heavy industry, after a disagreement with the then Union industries minister — but was swiftly reassigned to the Maruti project by Indira Gandhi’s office.

Given that PSUS remain vital to the Indian economy and indeed even the Indian markets, it is worth asking how some of these vital characteristics can be recaptured in today’s India. For one, the question of PSU compensation must be looked into. When nationalised bank chairpersons continue to be paid a tenth or less of what their private-sector counterparts earn — and so on down the line — it is impossible to suppose that senior management will be as committed. Krishnamurthy’s companies also benefited greatly from global integration. BHEL bid for and won major projects overseas. Maruti had Japanese input and SAIL of course had technical advice at various points from both the United States and the erstwhile Union of Soviet Socialist Republics. Global integration breeds competitiveness. The stranglehold of the Indian Administrative Service (IAS) must also be broken. Krishnamurthy was a paramount public servant without being in the IAS. Some of his most respected peers in the public sector emerged from the Railways cadres. His own proteges may have included R C Bhargava from the IAS, but also several from the Indian Audit & Accounts Service. The other cadres are crucial sources of energy and professionalism if they are given the ladder to the top. Finally, the political leadership must learn the benefits of empowering effective leaders and giving them time to make a difference. Krishnamurthy was effective in setting up sustainable institutional structures; the companies he led bore his mark long after he had left.