Privatisation

Privatisation

          Privatisation may be defined as a transfer of assets from the public sector to private sector. Privatisation is fast gaining ground. It is hard to find a country without a privatisation programme. In the wake of approval of GATT proposals the complexion of the world economy has completely changed.
          As for India the latest Public Enterprises survey shows that of the operating 240 central PSUs nearly 50% are incurring loss. It was estimated that the loss suffered was to the tune of Rs. 5287 crore. It is general impression that private sector works while public sector enjoys. Losses are on the increase year after year.
          Gone are the days when nationalization was thought to be the only panacea for our socio-economic ills. With thousands of crores stuck up in the mire of mismanagement and corruption, there are no two opinions that most of the public sector units are a dreadful drain on the national economy. Privatisation means disinvestment. The enormous funds thus released could be used for more profitable purposes. This money can be used for development of infrastructure sectors like transport, tele communication, technical education and the like. Besides, funds can be invested in the employment generating schemes.
          When India adopted the concept of mixed economy, public sector was supposed to act as a lever to lift our economy to great heights. It was intended to pose healthy challenge to private sector. Ironically, public sector came to be a perpetual drain on Indian economy. The inefficiency and corruption in public sector has proved detrimental to growth rate of the economic progress of the country. Though it provided industrial infrastructure, Indian economy could not build on it because of excessive political interference and incompetent management. So at present India should look at private sector as a partner in public enterprises lest all our investments in public sector should go in waste. It will encourage privatisation as well as improvement in the performance of the public sector. In the fast changing economic scenario it is imperative that privatisation has to be accepted as a compulsory step.

          The honeymoon with socialism is over in most of the countries. India is no exception. Take the example of nationalized banks. Nationalized banks were under pressure to hold loan melas and invest in populist schemes. The writing off corers of loans drained off wealth of the nation. The cement, steel and oil sectors have not fared better. The privatisation has become a global phenomena. Countries are under pressure to reduce fiscal deficits. Privatisation is an economic programme of paramount importance in a number of industrially advanced countries. Even a communist country like China is not averse to the concept of privatisation. As for India leaving six core areas such as defense, atomic energy, mineral, oils, railway, transport, all other industries have been opened to the private sector. While these measures have been widely hailed serious concern has been voiced on two counts. First, Public sector will be down graded. Secondly, a poor country cannot afford disparity of income. The rich will grow richer and the poor will become poorer. There will be a rise of capitalist class in the country.
          AU the same we must realize that privatisation is not the end of the road. In fact there are lakhs of sick units in private sector too. The only lasting solution would be to professionalize the PSUs. The unhealthy practice of appointing bureaucrats as heads of PSUs should be done away with. The managers should be made accountable. Surplus staff should be retrenched because Voluntary Retirement Scheme has not proved effective.
          What we really need today is an efficient national sector comprising both public and private sectors. Both the sectors should be committed to the economic development of the country. To make this possible both the sectors should be encouraged irrespective of ideological difference. Private sector can, too, participate in the areas under Public sector—power generation, coal production, banking and insurance to secure required rate of growth.