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Privatization: Do We Need to Change the Strategy?

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  • Jayashree Dubey
  • Dharmesh Shah

Abstract

Privatization, the buzzword under the NDA government, has been largely appreciated by the intelligentsia. At the same time, there was criticism too, especially at the resale of Hotel Centaur Mumbai to Sahara India Group at Rs. 115 cr, just after six months of disinvestment and sale to Batra Hospitality Pvt. Ltd., at Rs. 83 cr. Similarly, Tatas’ attempt to divert Rs. 1200 plus cr from the corpus of VSNL to Tata Teleservices Ltd., has put a big question mark on the rationality of the decision. The disinvestment process was adopted by the Government of India in the year 1991 mainly to fill the lacuna in the ability of the government to run the Public Sector units profitably, which in turn added to the burden of the exchequer. In the process, the profit-making companies were also put on the block. There is a need to properly analyze the profit history of a PSU compared to that of the private companies in the same industry and to see how best the problem of loss or decrease in profit of PSU’s over the years can be combated before rushing into disinvestment. The policy also needs revision on the basis of lessons learnt from previous experiences of disinvestment.

Suggested Citation

  • Jayashree Dubey & Dharmesh Shah, 2005. "Privatization: Do We Need to Change the Strategy?," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(4), pages 28-38, November.
  • Handle: RePEc:icf:icfjme:v:03:y:2005:i:4:p:28-38
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