A PROJECT SUBMITTED IN PARTIAL FULFILMENT
OF THE REQUIREMENT FOR DEGREE OF B.COM (H)
UNIVERSITY OF DELHI
PAPER – CH6.3 (B)
OPTION: PROJECT WORK
UNDER THE SUPERVISION OF
MENTOR’S NAME:ANURADHA AGGARWAL
This is to certify that the material embodied in this study entitled “PUBLIC
SECTOR” is based on my own research work and my indebtedness to other
work/publications has been acknowledged at the relevant places.
This study has not been submitted elsewhere either wholly or in part for award
of any degree.
RADHI KA CHOPRA
This is to certify that the project titled “PUBLIC SECTOR” done by
“RADHIKA CHOPRA” is a part of his/her academic curriculum for the degree
of B.Com(H). It has no commercial implication and is done only for academic
Table of Contents
1. Introduction to Public Sector .......................................................4
2. Emergence of Public Sector in India ...........................................5
2.1. Evolution of PSUs in India thus can be divided into three
distinguished phases: ...................................................................... 6
3. Classification of Public Sector Undertakings .............................8
4. Role of Public Sector ......................................................................9
5. Causes for expansion of public sector in India .........................12
6. Analysis of Public Sector Companies ........................................15
6.1. Indian Oil Corporation ........................................................ 15
6.2. National thermal Power Corporation ................................. 16
7. Limitations of the Public Sector .................................................18
8. Challenges Faced by Public sector .............................................22
9. How Leaders Should Respond ....................................................25
1. Introduction to Public Sector
The public sector refers to that part of the economy which is primarily
concerned with providing basic government services. The composition of the
public sector varies by country, but generally in most countries the public sector
includes services such as the police, military, public roads, public transit,
primary education and healthcare for the poor. The public sector might provide
services that non-payer of taxes cannot be excluded from, services which
benefit all of society rather than just the individual who uses the service, and
services that encourage equal opportunity."
Business sector which form a part of the private sector differ from the public
sector on the context that they aim to make profits in the industry whereas the
public sector aims at public welfare.
2. Emergence of Public Sector in India
Post Independence, India was grappling with grave socio-economic problems,
such as inequalities in income and low levels of employment, regional
imbalances in economic development and lack of trained manpower, weak
industrial base, inadequate investments and infrastructure facilities, etc.
Therefore the government via the Public Sector took up the task of developing
the economy and making it self-reliant. The country adopted the planned
economic development polices, which envisaged the development of PSUs.
Initially, the public sector was confined to core and strategic industries. The
second phase witnessed nationalization of industries, takeover of sick units from
the private sector, and entry of the public sector into new fields like
manufacturing consumer goods, consultancy, contracting and transportation etc.
The Industrial Policy Resolution 1948 outlined the importance of the economy
and its continuous growth in production and equitable distribution. In this
process, the policy envisaged active engagement of the State in development of
The Industrial Policy Resolution 1956 classified industries into three categories
with respect to the role played by the State -
The first category (Schedule A) included industries whose future
development would be the exclusive responsibility of the State
The second (Schedule B) category included Enterprises whose initiatives
of development would principally be driven by the State but private
participation would also be allowed to supplement the efforts of the State
And, the third category included the remaining industries, which were left
to the private sector.
In 1969, the government nationalized 14 major banks.
The Industrial Licensing Policy 1970 placed certain restrictions on undertakings
belonging to large industrial houses, defined on the basis of assets exceeding Rs
In 1973, the definition of large industrial houses was adopted in conformity
with that of the Monopolies and Restrictive Trade Practices Act (MRTP) 1969
included companies whose assets exceeded Rs 200 millions.
The Statement on Industrial Policy in July 1991 was also significant. It brought
in fundamental changes in the MRTP Act as well. The statement revised the
priority of the public sector.
2.1. Evolution of PSUs in India can be divided into three
1) The pre-independence era:
During the pre-independence era there were few public enterprises, namely the
railways, the posts and telegraph, the port trust, All India Radio and the
ordinance factories were among the few other government managed enterprises.
2) The post-independence era:
During the post independence era, the Industrial Policy Resolution 1956 was
implemented. Moreover, several strategies specific to the public sector were
defined in policy statements in 1973, 1977, 1980 and 1991.
3) The post-liberalization period:
The post liberalization era which commenced from 1991 saw the Government
introducing several new concepts with a view to accord for greater financial and
managerial autonomy and with an aim to lead the economy towards economic
developing by incurring higher capital expenditure apart from just forming joint
ventures within the country as well as outside.
The fourth period could perhaps be the one following the recent global
economic crisis. This period was marked by the infusion of more capital by the
government in economy in order to boost sectors like real estate, agriculture and
small enterprises, with the public sector bank providing capital at lower interest
rates. These initiatives of the Government helped contain serious after effects of
the economic meltdown while keeping a tab on inflation.
3. Classification of Public Sector Undertakings
Public Sector Undertakings (PSUs) can be classified as Public Sector
Enterprises (PSEs), Central Public Sector Enterprises (CPSEs) and Public
Sector Banks (PSBs).
The Central Public Sector Enterprises (CPSEs) are also classified into 'strategic'
and 'non-strategic'. Areas of strategic CPSEs are:
Arms & Ammunition and the allied items of defence equipments, defence
air-crafts and warships
Atomic Energy (except in the areas related to the operation of nuclear
power and applications of radiation and radio-isotopes to agriculture,
medicine and non-strategic industries)
All other CPSEs are considered as non-strategic. For detailed information on the
classification and categorization of CPSE
4. Role of Public Sector
The public sector has been playing a vital role in the economic development of
the country. Public sector is always considered a very powerful engine of
economic development and an important instrument of self-reliance. The main
contributions of public enterprises to the growth of our country can have been
1. Filling the Gaps in Capital Goods:
At the time of independence, there existed serious gaps in the industrial
structure of the country, particularly in the fields of heavy industries such
as steel, heavy machine tools, exploration and refining of oil, heavy
Electrical and equipment, chemicals and fertilizers, defence equipment,
etc. Public sector has helped to fill up these gaps. The basic infrastructure
required for rapid industrialisation has been built up, through the
production of strategic capital goods. In this way the public sector has
considerably widened the industrial base of the country.
2. Employment Generation:
Public sector has created millions of jobs to tackle the unemployment
problem in the country. Public sector accounts for about two-thirds of the
total employment in the organised industrial sector in India. By taking over
many sick units, the public sector has protected the employment of
millions. Public sector has also contributed a lot towards the improvement
of working and living conditions of workers by serving as a model
3. Balanced Regional Development:
Public sector undertakings have located their plants in backward and
untraded parts of the county. These areas lacked basic industrial and civic
facilities like electricity, water supply, township and manpower. Public
enterprises have developed these facilities thereby bringing about complete
transformation in the socio-economic life of the people in these regions.
Steel plants of Bhilai, Rourkela and Durgapur; fertilizer factory at Sindri,
are few examples of the development of backward regions by the public
4. Contribution to Public Exchequer:
Apart from generation of internal resources and payment of dividend, public
enterprises have been making substantial contribution to the Government
exchequer through payment of corporate taxes, excise duty, custom duty etc.
In this way they help in mobilizing funds for financing the needs for the
planned development of the country. In recent years, the total contribution
from the public enterprises has increased considerably, between the periods
2002-03 to 2004-05 the contribution increased by Rs 81,438 cores on the
5. Export Promotion and Foreign Exchange Earnings:
Some public enterprises have done much to promote India’s export. The
State Trading Corporation (STC), the Minerals and Metals Trading
Corporation (MMTC), Hindustan Steel Ltd., the Bharat Electronics Ltd., the
Hindustan Machine Tools, etc., have done very well in export promotion.
The foreign exchange earnings of the public sector enterprises have been
rising from Rs 35 cores in 1965-66 to Rs 42,264 cores in 2004-05.
6. Import Substitution:
Some public sector enterprises were started specifically to produce goods
which were formerly imported and thus to save foreign exchange. The
Hindustan Antibiotics Ltd., the Indian Drugs and Pharmaceuticals Ltd.
(IDPL), the Oil and Natural Gas Commission (ONGC), the Indian Oil
Corporation Ltd., the Bharat Electronics Ltd., etc., have saved foreign
exchange by way of import substitution.
7. Research and Development:
As most of the public enterprises are engaged in high technology and heavy
industries, they have undertaken research and development programmes in a
big way. Public sector has laid strong and wide base for self-reliance in the
field of technical know-how, maintenance and repair of sophisticated
industrial plants, machinery and equipment in the country. Through the
development of technological skill, public enterprises have reduced
dependence on foreign knowhow. With the help of the technological
capability, public sector undertakings have successfully competed in the
In addition to the above, the public sector has played an important role in the
achievement of constitutional goals like reducing concentration of economic
power in private hands, increasing public control over the national economy,
creating a socialistic pattern of society, etc. With all its linkages the public
sector has made solid contributions to national self-reliance.
5. Causes for expansion of public sector in India
At the time of independence, India was backward and underdeveloped –
basically an agrarian economy with weak industrial base, high rate of
unemployment, low level of savings and investment and near absence of
infrastructural facilities. Indian economy needed a big push. This push could not
come from the private sector because of the lack of funds and their inability to
take risk with large long-gestation investments. As such, government
intervention through public sector was necessary for self-reliant economic
growth, to diversify the economy and to overcome economic and social
backwardness. The causes were:
1. Rate of Economic Development Planned:
The justification for public enterprises in India was based on the fact that the
targeted rate of economic growth planned by the government was much
higher than could be achieved by the private sector alone. In other words, the
public sector was essential to realize the target of high growth rate
deliberately fixed by the government.
2. Resource Allocation:
Another reason for the expansion of the public sector lies in the pattern of
resources allocation decided upon under the plans. In the Second Plan the
emphasis was shifted to industries and mining, mainly basic capital goods
industries to be developed under the aegis of the public sector. Thus more
resources for industrialization were funnelled through the public sector.
3. Removal of Regional Disparities:
Another important reason for the expansion of the public sector was the need
for balanced development in different parts of the country and to see that
there were no serious regional disparities. Public enterprises were set up in
those regions which were underdeveloped and where local resources were not
adequate. Good examples are the setting up of the three steel plants of
Bhillai, Rourkela and Durgapur and the Neyveli Project in Madras which
were meant to help industrialise the regions surrounding the projects.
4. Sources of Funds for Economic Development:
Initially, state was an important source of funds for development. The surplus
of government enterprises could be re-invested in the same industries or used
for the establishment and expansion of other industries. Profits of public
sector industries can be directly used for capital formation which is necessary
for the rapid development of the country.
5. Socialistic Pattern of Society:
The socialistic pattern of society envisaged in the Constitution calls for
expansion of public sector. For one thing, production will have to be centrally
planned as regards the type of goods to be produced, the volume of output
and the timing of their production. Besides, one of the objectives of the
directive principles of the Indian Constitution is to bring about reduction of
the inequalities of income and wealth and to establish an egalitarian society.
The Five Year Plans have taken this up as a major objective of planning. The
public enterprises were used as major instruments for the reduction of
inequalities of income and to bring about a more equitable distribution of
income in several ways.
6. Limitations and Abuses of the Private Sector:
The behaviour and attitude of the private sector itself was an important factor
responsible for the expansion of the public sector in the country. In many
cases the private sector could not take initiatives because of the lack of funds
and their inability to take risk with large long-gestation investments. In a
number of cases, the government was forced to take over a private sector
industry or industrial units either in the interest of workers or to prevent
excessive exploitation of consumers. Very often the private sector did not
function as it should and did not carry out its social responsibilities.
Accordingly, the government was forced to take over or nationalize the
private sector units.
To sum up, the expansion of the public sector was aimed at the fulfilment of our
national goals i.e. the removal of poverty, the attainment of self-reliance,
reduction in inequalities of income, expansion of employment opportunities,
removal of regional imbalances, acceleration of the pace of agricultural and
industrial development, to reduce concentration of ownership and prevent
growth of monopolistic tendencies by acting as effective countervailing power
to the private sector, to make the country self-reliant in modern technology and
create professional, technological and managerial cadres so as to ultimately rid
the country from dependence on foreign aid.
6. Analysis of Public Sector Companies
6.1. Indian Oil Corporation
Indian Oil Corporation Limited, or Indian Oil, is an Indian state-owned oil
and gas corporation with its headquarters in New Delhi, India. It is the world's
88th largest corporation and the largest public corporation in India when ranked
Indian Oil and its subsidiaries account for a 49% share in the petroleum
products market, 31% share in refining capacity and 67% downstream sector
pipelines capacity in India. The Indian Oil Group of companies owns and
operates 10 of India's 22 refineries with a combined refining capacity of 65.7
million metric tonnes per year. In FY 2012 IOCL sold 75.66 million tonnes of
petroleum products and reported a PBT of 37.54 billion, and the Government
of India earned an excise duty of 232.53 billion and tax of 10.68 billion.
R. S. Butola is the Chairman of Indian Oil. The company is mainly controlled
by Government of India which owns approx. 79% shares in the company. It is
one of the seven Maharatna status companies of India, apart from Coal India
Limited, NTPC Limited, Oil and Natural Gas Corporation, Steel Authority of
India Limited, Bharat Heavy Electricals Limited and Gas Authority of India
Indian Oil began its operations in 1959 as Indian Oil Company Ltd. The Indian
Oil Corporation was formed in 1964, with the merger of Indian Refineries Ltd.
The main products of Indian Oil are petrol, diesel, LPG, auto LPG, aviation
turbine fuel, lubricants and petrochemicals: naphtha, bitumen, kerosene
etc.Indian Oil operates the largest and the widest network of fuel stations in the
country, numbering about 20,575. The main services offered by Indian Oil are
Refining, Marketing, Pipelines, R&D and Training. Indian Oil's Research and
Development Center (R&D) at Faridabad supports, develops and provides the
necessary technology solutions to the operating divisions of the corporation and
its customers within the country and abroad.
As on 31 March 2013, the company had 34,084 employees, out of which 2643
were women (7.8%). Its workforce includes 14,981 officers.
The attrition rate
in Indian Oil is around 1.5%.
The company incurred INR 78 billion on
employee benefits during the FY 2012-13.
It has an annual turnover of 3,13,628 crore ( 3.13.trillion). Its Profit After Tax
is 7,831 crore ( 78.31 billion). Its total assets are worth 1,17,406 crore ( 1.17
trillion). It is currently being traded at 272.50 in the stock market.
6.2. National thermal Power Corporation
NTPC Limited (formerly known as National Thermal Power Corporation
Limited) is a Central Public Sector Undertaking (CPSU) under the Ministry of
Power, Government of India, engaged in the business of generation of
electricity and allied activities. It is a Company incorporated under the
Companies Act 1956 and a "Government Company" within the meaning of the
Act. The Headquarters of the Company is situated at New Delhi. NTPC's core
business is generation and sale of electricity to state-owned power distribution
companies and State Electricity Boards in India. The company also undertakes
consultancy and turnkey project contracts that comprise of engineering, project
management, construction management and operation and management of
power plants. The company has also ventured into oil and gas exploration and
coal mining activities.
Arup Roy Choudhury is the M.D. and Chairman of NTPC. It is the largest
power company in India with an electric power generating capacity of 42,454
MW. Although the company has approx. 18% of the total national capacity it
contributes to over 27% of total power generation due to its focus on operating
its power plants at higher efficiency levels.
It was founded by Government of India in 1975, which held 75% of its equity
shares on 31 March 2013.In May 2010, NTPC was conferred Maharatna status
by the Union Government of India. It is listed in Forbes Global 2000 for 2012 at
384th rank in the world.
NTPC was ranked 62nd among the 250 largest Power Producers and Energy
Traders in the world by Platts in 2012.
In 2009, it received ICSI National Award
for Excellence in Corporate Governance.
It has an annual turnover of 60,008.18 crore ( 600.08 billion). Its Profit After
Tax is 9,353.40 crore ( 93.53 billion). Its total assets are worth 1,19,683.40
crore ( 1.19 trillion). It is currently being traded at 179.10 in the stock market.
7. Limitations of the Public Sector
Despite their impressive role, Public enterprises in India suffer from several
problems and shortcomings. Some of these are described below:
1. Poor Project Planning:
Investment decisions in many public enterprises are not based upon proper
evaluation of demand and supply, cost benefit analysis and technical
feasibility. Lack of a precise criterion and flaws in planning have caused
undue delays and inflated costs in the commissioning of projects. Many
projects in the public sector have not been finished according to the time
Due to inefficient financial planning, lack of effective financial control and
easy availability of money from the government, several public enterprises
suffer from over-capitalization The Administrative Reforms Commission
found that Hindustan Aeronautics, Heavy Engineering Corporation and
Indian Drugs and Pharmaceuticals Ltd were over-capitalized. Such over-
capitalization resulted in high capital-output ratio and wastage of scare
3. Excessive Overheads:
Public enterprises incur heavy expenditure on social overheads like
townships, schools, hospitals, etc. In many cases such establishment
expenditure amounted to 10 percent of the total project cost. Recurring
expenditure is required for the maintenance of such overhead and welfare
facilities. Hindustan Steel alone incurred an outlay of Rs. 78.2 core on
townships. Such amenities may be desirable but the expenditure on them
should not be unreasonably high.
Manpower planning is not effective due to which several public
enterprises like Bhilai Steel have excess manpower. Recruitment is not
based on sound labour projections. On the other hand, posts of Chief
Executives remain unfilled for years despite the availability of required
5. Under-utilisation of Capacity:
One serious problem of the public sector has been low utilisation of
installed capacity. In the absence of definite targets of production,
effective production planning and control and proper assessment of future
needs many undertakings have failed to make full use of their fixed
assets. There is considerable idle capacity. In some cases productivity is
low on account of poor materials management or ineffective inventory
6. Lack of a Proper Price Policy:
There is no clear-cut price policy for public enterprises and the
Government has not laid down guidelines for the rate of return to be
earned by different undertakings. Public enterprises are expected to
achieve various socio-economic objectives and in the absence of a clear
directive, pricing decisions are not always based on rational analysis. In
addition to dogmatic price policy, there is lack of cost-consciousness,
quality consciousness, and effective control on waste and efficiency.
7. Inefficient Management:
The management of public enterprises in our country leaves much to be
desired. Managerial efficiency and effectiveness have been low due to
inept management, uninspiring leadership, too much centralisation,
frequent transfers and lack of personal stake. Civil servants who are
deputed to manage the enterprises often lack proper training and use
bureaucratic practices. Political interference in day-to-day affairs, rigid
bureaucratic control and ineffective delegation of authority hamper
initiative, flexibility and quick decisions. Motivations and morale of both
executives and workers are low due to the lack of appropriate incentives.
8. Undesirable Bureaucratic Interference:
While launching the public sector as part of national economic planning,
Nehru had emphasized the need for evolving a system that would ensure
adequate checks as well as enough freedom for an enterprise to function
quickly and efficiently. But gradually all public enterprises have come to
be treated as if they were all departmental undertakings the public sector
is slowly graduating into civil service culture.
"The control of management by specialists and technocrats so necessary
for the efficient and productive operation of the public sector is being
inexorably weaned out. The infiltration of the bureaucracy in the public
sector in a number of developing countries has become real and extensive
with the interference of red-tape, dilution of accountability, levelling
down of skill, enterprise, efficiency and even genius and eventually, loss
of productivity and profitability becoming the order of the day,"
9. Stagnation in production:
In certain vital public sector undertakings production has been more or
less stagnant. For instance, in spite of colossal investment, subsequent to
nationalization, the persistent stagnation in the coal industry is evident
from the foregoing table. This led to a coal crisis, the magnitude of which
could be guessed from the fact that some time back 1,000 trains were
cancelled. Due to coal scarcity power generation also plummeted.
10. Huge losses:
Public undertakings are different from the private enterprises. Profit
maximization is not the primary objective of the public sector. Its principal
aim is the promotion of social welfare. Still, as the public sector utilizes a
vast quantity of resources, it is expected that they should operate
efficiently and earn profit. The fact that public enterprises should create
financial surpluses or profit is an established desideratum. It is an
important performance criterion. In 1978 out of 153 enterprises as many as
142 were "running concerns" and only 11 were in various stages of
8. Challenges Faced by Public sector
1. Increasing Pace of Change:
With the increasing pace of change in the technological sector, public
sector enterprises with limited manpower and expertise find it very
different to keep up with the pace and thereby compete with other private
sector enterprises. Lately the public sector has been dealing with alot of
accelerated change: facing new pressures to learn and innovate to keep
up. Thorough change is not unique to public sector enterprises only,
however the lack of change that has occurred in the public sector in the
past raises a doubt about the adaptability of the new same by the public
sector unit. Ability to cope with uncertainty and change is both a
dispositional and capacity issue, and hence requires development focused
on strategies to manage change, as well as strategies to manage yourself
when going through and managing change i.e. not only maintaining your
market share but also trying to increase it.
2. Change in Public Perception:
With the continuous improvement in facilities provided to public by
means of online payment of tax, availability of information on public
service recruitment, public procurement goods and services which help in
reduction of opacity and enhancement of transparency of governance.
With the increased role of media and with more and more individuals
acting like citizen journalists, leaders in the public sector have seen their
public profile increase in recent years. A strict watch is kept on them
24*7 and hence they have to maintain a complete decorum in their
behaviour always and be alert regarding their actions always.
3. Citizen Empowerment:
The changing relationship between citizens, politicians and public can be
primarily attributed to the increasing role of information technology.
Today there is a large amount of user generated content which is publicly
available for examples blogs and forums; patients’ looking up health
information’s online, citizens signing online petitions. This is having a
wide ranging impact on how public services are organized and services
delivered. Hence nowadays there has been a shift from passive
consumerism to detailing what they refer to as ‘citizen empowerment’-
where the citizens play a more active role in the shaping and delivering of
public services. With an increasing role of citizen empowerment, the
public sector would find it difficult to fulfil the expectations of the public
in the future.
4. Changing Workforce:
Public sector has always been seen as a safe, secure career, giving a job
for life, where workers can move up the career ladder over the time span
but however the younger generations do not hold this traditional view
towards employment. With the rising level of workers in the age group of
25 to 50, public sector leaders are facing immense challenge in being
aware and understanding and handling the different work ethics of the
younger generations. Further the leaders should be able to cope with the
increasing turnover of staff, while helping the work power of the older
generations or holding on to older version of work ethics to become
resilient to change and adopt and adjust to the same. In the coming years
thus public sector leaders would have to deal with and at the same time
get the best out of workforce with natives of two different ages- the
information age and the industrial age- who embrace extremely different
philosophies and work ethics. With the rejection of the ‘job for life’
concept by the younger employees, will bring about changes that drive
the future development of public services introducing more competitive
oriented and performance focused careers.
5. Changing Environment:
Not only does the public sector leaders have to contend themselves with
the changes taking place in the technological sector, etc but they also
have to contend themselves to the changing environment which is not
only confined to those of national origin or impact. For example the
impact of globalisation on several enterprises. Most of the challenges
faced by leaders in the next five years would be of expectation and
complexities in the global scene and in trade and markets, where the
leaders will always be on their guard of what is happening on the other
corner of the globe as it would be affecting them as well. Along with
these the economic challenges and specifically the significant challenge
of how to achieve more with less would also stand as a treat for the
sustainability of public sector units
9. How Leaders Should Respond
1. Need for a new leadership:
In order to find solutions for these challenges so that they can be tackled
with, the public sector in particular shall be needing a complete revamp of
their leadership. Public sector is now in need of leaders who incorporate the
skills and qualities that leaders need in order to respond to challenges listed
and to improve the public sector. However the problem faced here is that
there is unsurprisingly no single agreed definition of the public sector
leadership. Despite the lack of a single definition some generic dimensions
to public sector leadership can be identified by the current discourse in this
area which makes use of the terms: collective leadership; collaborative
leadership /partnership working; adaptive leadership; and transformational
leadership. In particular we need a fully inclusive form of leadership to
account for the increasingly active role citizens for playing in the provider-
user relationship. Along with this a need for flexible/ adaptable leaders,
who need to be both transformational and transactional at different points
of time. Such leaders shall have a mindset that is responsive to immediate
issues and has the foresight to look over the horizon. The era of autocratic
leaders have gone who used to rule with an iron fist, and what they say
goes, now is the time for the collaborative model of leadership, which are
inclusive and yet visionary.
2. Building Relationships and Trust:
Public sector leaders need the continuous cooperation of the public in large
in order to not only face these challenges but also to overcome to ensure
sustainable development of the public sector in the years to come. In order
to achieve this cooperation from the public, leaders needs to develop a
relationship based on faith and truth between them, such a relationship can
only be established when the leaders become more visible, approachable
and communicate openly and fairly with their followers. The main of this
exercise is basically to make the leaders more transparent, open and be
clear about their purpose and to act all this with integrity. Alex Stobart
explains the need for leaders to reach out and blend different groups into a
sense of shared community and to deliver outcomes for their community
and to deliver outcomes for their community. Being open and honest in
asking for opinions, and available to listen to people’s idea, models the
desired environment for collaborative public leadership.
3. Innovators and Entrepreneurs:
In order to develop and improve public services, public sector needs to
attract and support innovators and entrepreneurs. For example, soft skills
which include entrepreneurship and innovation as well as communication,
teamwork and adaptability have a profound effect upon motivation to
change, willingness to change, and enthusiasm for learning. Thus
entrepreneurialism is important for all public sector leaders- and not
continued top-down, bureaucratic micro management, only then the public
sector can move through adolescence into maturity. Various articles have
brought out the traditional bureaucracy as inflexible in structure, averse to
risk and stifling innovation, ad details the need for the breakdown of
unnecessary bureaucracy and the development of a supportative environment
in order to prosper in the public sector. They further go on to describe how
innovation in public sector raises additional issues as and when compared to
the innovations in the private sector services, particularly around managing
risk when there is a low tolerance for public service failure. Thus the public
sector needs to foster risk while managing risk.