Disinvestment Of Public Sector Undertakings In India example essay topic

DISINVESTMENT OF PUBLIC SECTOR UNDERTAKINGS IN INDIA TODAY THE RUSSIAN ECONOMIC MODEL OF DEVELOPMENT CONNOTED THROUGH THE RUSSIAN FUR DOES NOT EXIST. TODAY THE CHINESE ECONOMIC MODEL OF DEVELOPMENT CONNOTED THROUGH THE MAO SUIT DOES NOT EXIST. Margaret Thatcher disrobed them. The concept of the GOLDEN STRAIGHT JACKET is avowed, to whether it were the Democrats or the Republicans, the Conservatives or the Laborites, the BJP or the Congress. The concept of the golden straight jacket has been embraced by all countries including India. It endeavors to shift the economic decision making from the government to the markets.

The concept of Disinvestment being it's major tenet. The Nehruvian temples of economic growth, better known as the Public Sector Undertakings were born as the outcome of the conscious policy of the government to speed up industrialization of the country with a view to giving added impetus to economic growth as well as achieve certain socio-economic goals. These undertakings account for 1/4 of our GDP. They also account for 1/3 of our exports and have made contributions to import substitution.

Also government undertakings employ more than 70% of the workers employed in the organized sector. These undertakings have helped reduce imbalances in regional development and a few of them have earned reputation for excellence at international level. But the picture is not as rosy as it seems, rather the scene in most of the PSU's is very chilling. According to figures up to March '99 losses incurred by 29 PSU's trebled within one year from approx. Rs. 1050 crores to Rs.

3600 crores. The major reasons for the non performance of the PSU's can be summarized as: Political Interference, High Cost of Delay, Fear of Scams, Headless Plants, Ineffective Management, Huge Inventories, Trade Unionism and Unutilized Capacities. A comprehensive policy on public sector was set out in the Industrial Policy Statement of July 24, 1991 - the year when the country had to tide over an unprecedented economic crisis reflected in its internal and external finances. The steps adumbrated included a review of public sector investments to focus on strategic and essential infrastructure enterprises and new procedures to tackle chronically sick and loss-making units". Rationality is least expected from an economist who is best defined as a man who tells you tomorrow why the things he predicted yesterday did not happen today".

The DEPARTMENT OF DISINVESTMENT has the following rationale: Because of the current revenue expenditure on items such as interest payments, wages and salaries of Government employee and subsidiaries, the Government is left with hardly any surplus for capital expenditure on social and physical infrastructure. Whereas the Government should be spending on basic education, primary health and family welfare, huge amounts of resources are blocked in several non-strategic sectors such as hotels, trading companies, consultancies, textile companies, chemical and pharmaceuticals companies, consumer goods companies etc. The Government continues to expose the taxpayers' money to risk, which it can readily avoid. The progress of disinvestment in India has been very slow THE PANDENOMIUM IN THE PARLIAMENT REMINDS US OF THE EXASPERATED HARRY TRUMAN WHO YELLED AT HIS SENATE ONCE AND HAD TO SAY THIS: "GIMME A ONE HANDED ECONOMIST, ALL MY ECONOMISTS SAY ON THE ONE HAND BUT ON THE OTHER" The half heartedness and the lack of conviction and understanding has resulted in this tottering pace... According to the World Bank (Global Development Finance) 2000, earnings from privatization in all developing countries totaled 272 billion dollars in the 1990's till 1998. Of this India's share was only seven billion dollars.

As against the target of Rs. 10,000 crore, an amount of only Rs. 1,829 crore was raised through disinvestment during the year 2000-2001. For the current financial year the target is fixed at Rs 10,000 crore.

India's disinvestment story never seems to go beyond the first few chapters DO YOU NEED TO ASK US WHY? A FACTITIOUS RULING COALITION AN IRRESPONSIBLE OPPOSITION SELF SERVING POLITICIANS CONFUSED THINKING AND CONSTANT POLICY FLIP FLOPS are just some of the major reasons why every time there's some movement forward, a new spanner is inevitably poked into the works. BUT IS THE POLITICS OF THE COUNTRY SOLELY TO BE BLAMED? WHAT ABOUT US - The 1 billion Indians A topic as grave as privatization is treated with enormous flippancy, the best example of our callous nature are the elections, which are filled with disgusting political slander and foul personal calumny. We have almost deadened our sensibilities for this seems to us as NORMAL CAMPAIGNING! DURING ELECTION TIME TOPICS OF PRIVATISATION AND OTHER STRATEGIC IMPORTANCE are dumped and not even heard off, the parties should be made to include these issues in their election manifestoes for which they should be made answerable to the electorates and through them to the nation.

Not only this the government should take decisions after a lot of rational, logical and foresighted consideration. It should not blindly go in for disinvestment to cover up for the complete failure of the government agencies to improve the poorly managed services, particularly in the rural areas. Privatization should not be adopted as an escape route by the government agencies to avoid public criticism. Rather the government should undertake to disinvest only those PSU's which fall under the non strategic list and have failed to provide any return on investment in the past many years but where a revival with some influx of capital is possible, the government should seriously weigh it's options. Disinvestment might seem a short term solution but what about the long term consequences. Let us take the example of Air-India: The first question that arises in everybody's minds is; SHOULD AIR-INDIA BE SOLD TO FOREIGNERS?

There was more than xenophobia at work here. The real value of Air-India lies not in its aging fleet or its image. It lies in its status as India's national carrier. Let us consider this scenario:" It is the year 2030 and a deal has been struck, the national carrier of India, Air-India has just been sold. Malaysian Airlines which had bought Air-India from the government of India has decided to sell it to China, China which in the past has given us enough unforgettable evidence of it's treachery. The rest we leave to your imagination... .".