Context: Privatization could spell major gains for India’s economy, but a strategy is needed to get the cooperation of key stakeholders.
Scope of Privatization in India
PSE ecosystem: There are 348 PSEs with a total investment of over Rs 16.4 trillion and more than a million employees, according to the Department of Public Enterprises.
Sectors to be held under state control: Atomic energy, space and defence; Transport and telecom; Power, petroleum, coal and other minerals and Banking, insurance and financial services.
Virtues of Privatisation:
Advantages of the private sector: In its own profit interest, it strives to be globally competitive, takes calculated risks and innovates through investment in research and development
Employs highly trained professionals and uses best practices to raise productivity and improve efficiency.
Foster innovation: It initiates a new phase of creative destruction, leading to product and process innovation that would replace old products and production methods with new ones.
Challenges
Political challenge: of bringing all stakeholders together - bureaucratic establishment, labour unions, and political parties all have their interests in state control of the economy.
Bogey of crony capitalism
Democratic resistances: on similar lines of farmer protest against the government’s efforts to improve the farm economy through exposure to market forces.
Widespread suspicion of business people: as tax dodgers and greedy profiteers.
Way forward
Launch a massive public relations campaign: To explain, educate and persuade people how the privatization of PSEs would have a multiplier effect on India’s job market.
Business community must step forward and create a positive image through transparency in its hiring and business practices.
Government must adopt pragmatic approaches: E.g. Approaching each unit with open-mindedness and flexibility while focusing on the desired outcomes.
Evolve new mechanisms for cooperation: Between Centre, states and private players.