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Privatization And Public Enterprise Reform: A Suggestive Action Plan


  • Simrit Kaur



Introducing reforms for the State Owned Enterprises (SOEs) has been an integral part of the reform process initiated in India since 1990s. While reforming, the concerns about ownership, competition and regulation, which have a direct bearing on the issue of the relative performance of publicly owned and privately owned firms have been adequately looked into. This paper focuses on the various modalities of reform options, such as Divestiture (whereby private ownership is inducted in publicly owned enterprises), Greenfield Privatization (whereby private sector is allowed to come and compete in areas hitherto reserved for public sector), and Cold Privatization (that is granting greater autonomy to managers of SOEs by making them sign Memorandum of Understanding) adopted by India to improve the performance of its SOEs. Specifically, the paper gives a comprehensive assessment of the disinvestment policies implemented since 1990. The paper provides a suggestive action plan to spur reforms and improve outcomes and concludes by summarizing the main findings from an overall policy perspective in the context of the Indian SOE reform programme.

Suggested Citation

  • Simrit Kaur, 2004. "Privatization And Public Enterprise Reform: A Suggestive Action Plan," ASARC Working Papers 2004-08, The Australian National University, Australia South Asia Research Centre.
  • Handle: RePEc:pas:asarcc:2004-08

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    References listed on IDEAS

    1. Ramamurti, Ravi, 1999. "Why haven't developing countries privatized deeper and faster?," World Development, Elsevier, vol. 27(1), pages 137-155, January.
    2. Nellis, John & Kikeri, Sunita, 1989. "Public enterprise reform: Privatization and the World Bank," World Development, Elsevier, vol. 17(5), pages 659-672, May.
    3. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    4. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
    5. Simrit Kaur, 2002. "The Employment Implication of Divestiture: The Indian Experience," Vision, , vol. 6(1), pages 59-72, January.
    6. Yarrow, George, 1999. "A theory of privatization, or why bureaucrats are still in business," World Development, Elsevier, vol. 27(1), pages 157-168, January.
    7. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, January.
    8. Furubotn, Eirik G & Pejovich, Svetozar, 1972. "Property Rights and Economic Theory: A Survey of Recent Literature," Journal of Economic Literature, American Economic Association, vol. 10(4), pages 1137-1162, December.
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