Privatization of Public Enterprises in India – An Appraisal
In the liberalization era, competitiveness of industry, be it public or private, assumes great importance for their very survival. The question of privatization of public enterprises arises because of their poor financial and operating performance. Public enterprises in India incur chronic losses, require state financed equity injections and credit from the banking system. Privatization, which is used to mean the transfer of both ownership and control of the firm from the public sector to the private sector, has been viewed as a possible remedy to overcome the malaise of the public sector. Programs to privatize enterprises in transition economies should be evaluated in terms of three broad dimensions: the corporate governance mechanisms they create, the supporting institutions they foster, and the extent to which they create a self-sustaining economic and political reform process. Today, private initiative is being encouraged even in the development of infrastructure like power, roadways, telecommunications, etc. It is believed that privatization will reduce the role of the state, lessen the state’s fiscal deficit by decreasing the demand for continued financing of firms from the exchequer, and improve the efficiency and the competitive strength of the public sector enterprises. This paper explores issues relevant to the privatization of state owned enterprises in India.
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Volume (Year): II (2004)
Issue (Month): 1 (February)
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