Essay on disinvestment of public sector enterprises
Answers
The Public Sector Undertakings (PSUs) have suffered long from government apathy, bureaucratic interference, indecision, wrong priorities and policies, vacant positions at the top for a long time, lack of objectivity and transparency in selecting the personnel etc. Consequently, the nation has paid heavily as many of these units have been running in losses or not giving commensurate returns. There has been total lack of professionalism, accountability and decision-taking. The management do not have any say in policy, planning and implementation. Over-staffing, lack of professional culture and administered price regime have been other serious handicaps. PSUs have helped a lot in building infrastructural facilities in the country and they have been a backbone of our industrial growth and strength but their overall performance has been very poor, their return on huge investment has been very meagre and negligible.
As a part of reform package in 1991 the disinvestment and privatization of PSUs were recommended. It was one of the many confidence building measure. During 1991, India witnessed some very harsh economic realities which included fiscal deficit touching 8.4 per cent of G.D.P, the Balance of Payment crisis, very high inflation rate etc. Consequently, India had to pledge gold worth US $400 million abroad and depreciate the rupee by 25 per cent in two stages. To correct these deficiencies the reforms became inevitable. Disinvestment of the equity of PSUs was one of the measures of economic reforms initiated then. And the PSU disinvestment was targeted at Rs.2,000 crore but unfortunately only Rs.168 crore could be raised through this process. And it put a question mark on the success of the various reform measures itself