Genesis
1. Nehruvian ideology
and mahalanobis model
2. The idea of “Trickle-down
effect”
3. Rapid
industrialization of the 1960s.
Types
1. Departmental (100%
government ownership and control)
2. Corporation
(Governed by a dedicated legislation)
3. Company (registered
under the Companies Act)
Approaches to
Privatization
1. Denationalization
2. Joint Ventures
3. Liquidation
4. Holding Company.
5. Leasing
6. Restructuring
7. Load shedding
8. Contracting
Problems with PSUs
1. Lack of autonomy
2. Poor quality
3. Technologically challenged
4. Low productivity
5. Red tapism
6. Inefficiency and
corruption
7. Political interference
8. Procedural
bottlenecks
9. Ineffectiveness
Policy of
Disinvestment
1. 1992-99 Minority
stakes; C Rangarajan Committee; First looked after by the dept. of Public enterprise
and then by dept. of economic affairs.
2. 1999-2004 Strategic
sales; larger revenue targeted; Dept. of disinvestment formed and later
upgraded to Ministry; Monopoly was apprehended;
3. 2004 onwards IPOs
and Minority stakes; Ministry downgraded to department.
4. Fast Disinvestment
undertaken in Czech Republic, Russia. Slow disinvestment undertaken in China.
Both showed not so promising results.
Reforms undertaken
1. Sick Industries
Companies Act, 1985 (Success rate 45/64)
2. BRPSE (Success rate
62/65)
3. Memorandums of
Understanding as suggested by the Arjun SenGupta Committee
4. Maharatnas,
Navratnas and Mini-ratnas
5. Public Private
Partnerships
6. Quarterly
Performance Reviews
7. Audits by external
agencies
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