A welcome decision – belatedly though!

Secretary to the President has issued a directive to suspend the ongoing advertising and marketing programs of all State institutions with immediate effect. The chairmen and boards of directors of state enterprises, state agencies, state banks and insurance companies are to be notified to this effect. It is very heartening to note that the underlying objective of this directive is to ensure that such expenses are incurred in the best interest of the organisation’s corporate strategy. It also encompasses another very important aspect that such activity should come within the spec of the Government’s National Development Program. 

The secretaries and some officials mentioned in this directive have been there for donkey’s years but have on their own failed to take cognisance of this matter and as a result this area has been a wild playground for those hell bound to adopt shortcuts and cheeky measures to plunder public funds unnoticed and unseen. Huge amounts have gone down the drain through this sluice-gate adding to the enormous wastage going on unabated in State-owned enterprises. To manoeuvre this slanderous operation ostensibly as a sophisticated modern marketing ploy, some State institutions have even created separate departments in its implementation. They recruited guys who were well-suited to adapt fast to the required ruses. They hardly have any specialties or expertise. In the end this became a game involving not millions but billions of public funds.

For the audit function it was only a question of ascertaining whether the budget was approved by the relevant authorities. They do not dwell on the area of determining whether the expenditure is necessary, productive and/or genuine. The new accounting methods are so deceptive that no one can at a glance grasp from the published balance sheets or a statement of accounts, how much has been spent for advertising! They continue as hidden information mixed up with several others in highly un-understandable and un-identifiable forms. The caravan has gone on like this for quite a long time until finally unveiled by someone who had his ears to the ground and also was close enough to the President.

The expenditure under this budget is enormous in some institutions. Sometimes the amount spent under the guise of promoting a new scheme or product is much more than the value gained through the product promoted. State banks are in the forefront. They begin extensive advertising promotions from time to time for introducing new products. When they monitor the progress to justify the huge expenditure involved, figures are provided to satisfy the justification facially. 

Just to quote one example, one State bank introduced a new savings scheme and spent a large sum to advertise its benefits and to attract customers. Branches were given targets to achieve. But when the branches found that the product is not selling as expected, in order to keep to targets assigned to them, they got hold of customers to withdraw from some of their existing other accounts and transfer the balances to a new account under the new product name. When they submit the progress report the Head Office marketing wizards sum up the figures to show the popularity and how the new product has grown. But they perhaps deliberately ignore to indicate what has happened to the balances in the other accounts. This is a process that has continued for some time under such gimmicks and ruses.

Often advertising is channelled through intermediaries who keep a big margin for themselves. Proper investigations will disclose that in most cases the intermediaries are companies created by those in the state institutions itself for profit sharing. There is a Court case pending instituted by the criminal investigations department against a CEO of a subsidiary floated by a state bank, who had formed a company in the name of some of his family members to collect commissions paid by his institution for promoting deposits. 

State banking sector operates with very high budgetary provisions annually set apart for advertising. The amount provided for one year in one such bank some years ago was Rs. 800 million but the actual expenditure incurred during the year exceeded Rs. 1 billion which was approved subsequently as additional expenses. In many instances the provisions are used for flagitious purposes. Underlying political mingling is also not uncommon. 

There are many other stratagems associated with advertising funds. Institutions very often use their advertising capacity to build up media buffer zones to stop adverse publicity against them. By limiting and expanding the amounts set apart for advertising they tend to deceptively lure the media institutions to tow a desired line. Due to this the opportunity that is available as a right granted for whistle blowers and social activists to review, expose and criticise public institutions in public interest gets curtailed. Such a situation provides the State Institutions engaged in any dubious and irregular operation to continue ad nauseum. 

Under all these circumstances the decision to subject the bottomless expenditure on spurious advertising business now engaged by State Enterprises to an effective control under a central authority is most welcome. It will hopefully impart some method to the madness now going on, and on the other hand it will no doubt save public funds which could be diverted to some productive purpose. Advertising by public authorities could be well-supported by State media itself with least costs and in a more reliable and acceptable manner. This move should also be welcome by the private sector who stand to claim that governments should not do business since advertising invariably include a competitive factor and if the State sector too enters the race it would be disadvantageous to the private sector. 

Ulterior motive

There is also another school of thought widely canvassed against this move alleging that State has taken this decision with an ulterior motive to control media institutions. This is not a tenable argument because if the private media institutions cannot function without available advertising opportunities from the State, it shows some kind of aberration in their systems. Does this convey that their businesses cannot survive without an income from State advertising? 

If the State is discriminative or favouring one private media against another it is quite different. But if the State as a policy has taken a decision that all SOEs should advertise only under a guided program of the Government, then there is no ground for the media stations to complain. They should be happy and the public will no doubt be happy that the media becomes free to that extent to express freely without any fear of being influenced. We, the members of the Public are aware how the media is pressurised to cover up things and the part played by high value advertising packages offered to them.

Media has a vital role to play in public interest. We need a free and independent media to bring matters to the notice of the public in a proactive manner. 

So, by rendering the media to act independently and without any obligation on their part to look forward to and adjust their reporting depending on advertisement income, the country will benefit and the State too. Therefore, this should be regarded as a step to strengthen the role of the media. The business and commercial competition openly facilitated by the State should be sufficient enough to sustain the media at a level of playing a dynamic role instead of a subdued one based on expectations of State patronage for commercial advertisements. However, we agree that this decision is causing the media business significant losses. Because of the limitation of a fair slice of their freely available profit income, but the public cannot help. Hence those parties who level accusations that it is a measure to weaken the media of the country should look at this directive more objectively.

Now that the focus of the highest state authorities is pointed on the wasteful expenditure of the SOEs, we wish to invite their further attention to the following;

•  Are the SOEs following proper procurement procedures? 
•  Are the executives in some SOEs paid high and extravagant salaries, perks and other benefits in not keeping with and quite alien to the State sector emoluments? If some-one argues that such payments and benefits are extended because of their special aptitudes, the only justification would be to correlate those to the actual performance by those executives.
•  Have some executives who were recruited to add fresh blood and new thinking done their job properly or have they been allowed to go scot free even after causing heavy damages and losses to those institutions?
•  Are the SOEs engaged in other activities similar to the advertising hoax leading to wasting of public funds?
•  Are there sufficient and adequate punitive procedures to recover the losses and hold those responsible for negligence, corruption and/or other dubious operations. 

There have been many reports, recommendations, disclosures covering the area of lapses in the management of affairs in the SOEs despite which the sordid state of affairs have continued through long periods. Unfortunately, there aren’t many instances where appropriate corrective and remedial measures were taken. In the context it is nothing but right to appreciate the step initiated by the President to stop wasteful expenditure of public funds under various game plans and stunts such as the advertising gimmick.