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The Disinvestment of Public Sector Enterprises: The Indian Experience


  • T. G. Arun
  • F. I. Nixson


This paper examines the disinvestment of shares of public sector enterprises (PSEs) in India since 1991. The poor performance of PSEs made reform increasingly urgent in the context of the broader strategy of the liberalization of the economy to deal with the perceived weaknesses of India's development strategy. The paper argues that the main aim of disinvestment has been to reduce the public sector borrowing requirement, at the cost of the restructuring and rationalization of PSEs in particular and the public sector in general. The process of disinvestment has been a complex one and has not been free of criticism. Alleged under-pricing of shares sold, lack of transparency, limited public support for disinvestment and the absence of a common set of objectives between the Government of India and the Disinvestment Commission have been major problems. In many respects, India provides a checklist of how not to disinvest.

Suggested Citation

  • T. G. Arun & F. I. Nixson, 2000. "The Disinvestment of Public Sector Enterprises: The Indian Experience," Oxford Development Studies, Taylor & Francis Journals, vol. 28(1), pages 19-32.
  • Handle: RePEc:taf:oxdevs:v:28:y:2000:i:1:p:19-32
    DOI: 10.1080/713688302

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    References listed on IDEAS

    1. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, January.
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    Cited by:

    1. Ghosh, Saibal, 2008. "Does divestment matter for firm performance?: Evidence from the Indian experience," Economic Systems, Elsevier, vol. 32(4), pages 372-388, December.
    2. Arun, Thankom G., 2003. "Regulation and Competition: Emerging Issues in an Indian Perspective," Centre on Regulation and Competition (CRC) Working papers 30620, University of Manchester, Institute for Development Policy and Management (IDPM).
    3. Ajay Chhibber & Swati Gupta, 2017. "Bolder Disinvestment or Better Performance Contracts? Which Way Forward for India’s State-Owned Enterprises," Working Papers id:12127, eSocialSciences.
    4. Chhibber, Ajay & Gupta, Swati, 2017. "Bolder Disinvestment or Better Performance Contracts? Which Way Forward for India's State-Owned Enterprises," Working Papers 17/205, National Institute of Public Finance and Policy.
    5. Ajay Chhibber & Swati Gupta, 2017. "Bolder Divestment Not Better Performance Contracts are the Solution for India's Public Sector," Working Papers 2017-19, The George Washington University, Institute for International Economic Policy.

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