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Public Sector Undertakings: Bharat’s other Ratnas

Author

Listed:
  • Ajay Chhibber

    (George Washington University)

  • Swati Gupta

    (National Institute of Public Finance and Policy, New Delhi)

Abstract

This paper analyzes the performance of India’s 235 public sector undertakings (PSUs) – India’s socialistic legacy from the Nehru-Gandhi days. Of these 7 largest PSUs are called Maha Ratnas, 17 are called Nav Ratnas and some 73 are given the title of Mini Ratnas. e economic reforms of 1991 disman- tled the “license-raj†but le the PSUs intact. Attempts were made to improve their performance through performance contracts called Memorandum of Understandings (MoUs) with some success but with still a large number of loss makers. A brief attempt was made under the NDA-1 government from 1999-2004 to begin dismantling this legacy with strategic disinvestment (privatization) but met with considerable opposition from vested interests and labour unions. Subsequent UPA governments tried to further im- prove the performance of these companies through better performance contracts and bringing more PSUs into the Ratna classi cation. Under UPA-2 more aggressive disinvestment (partial privatization) was also pursued to raise more revenue and hopefully improve rm performance.

Suggested Citation

  • Ajay Chhibber & Swati Gupta, 2017. "Public Sector Undertakings: Bharat’s other Ratnas," Working Papers 2017-6, The George Washington University, Institute for International Economic Policy.
    • Handle: RePEc:gwi:wpaper:2017-6
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    File URL: http://www2.gwu.edu/~iiep/assets/docs/papers/2017WP/ChhibberIIEPWP2017-6.pdf
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    References listed on IDEAS

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    1. Shirley, Mary M & Xu, Lixin Colin, 1998. "Information, Incentives, and Commitment: An Empirical Analysis of Contracts between Government and State Enterprises," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 14(2), pages 358-378, October.
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    3. 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.
    4. Nandini Gupta, 2005. "Partial Privatization and Firm Performance," Journal of Finance, American Finance Association, vol. 60(2), pages 987-1015, April.
    5. Sangeetha Gunasekar & Jayati Sarkar, 2014. "Does autonomy matter in state owned enterprises? Evidence from performance contracts in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-034, Indira Gandhi Institute of Development Research, Mumbai, India.
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    Citations

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    Cited by:

    1. 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.
    2. Chhibber, Ajay, 2021. "India's Interventionist State: Reduce Its Scope and Increase Its Capability," MPRA Paper 105711, University Library of Munich, Germany, revised 01 Feb 2021.
    3. Ajay Chhibber, 2021. "India's Interventionist State: Reduce Its Scope and Improve Its Capability," Working Papers 2021-02, The George Washington University, Institute for International Economic Policy.
    4. 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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    More about this item

    Keywords

    Public Sector Undertakings ; State-Owned Enterprises; MoUs; disinvestment;
    All these keywords.

    JEL classification:

    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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