Birds Of Air India Feather

The Economic Times     29th October 2021     Save    
QEP Pocket Notes

Context: Privatisation of the Public Sector Undertakings (PSUs) and challenges faced by the Government.

Challenges of Goverment in Privatisation of PSUs

  • Weak architecture of the privatisation programme: There is a strong possibility of asymmetry between what the GoI puts on the table for sale and what the investor interests are.
  • Lack of policy clarity - GoI is pursuing two tracks: Privatisation of PSUs and monetisation of assets.
    • Experience of many erstwhile communist regimes that transited to a market-based ecosystem had led to ‘oligarchy’.
  • Long-drawn and tortuous process of privatization: AI privatization after long delays and fall in valuation.
  • Politicisation of decision making: Government has two more years to push privatization agenda as the next set of elections are set for 2024.
    • Concerns of opposition will increase as the when it comes to profit-making PSUs.

      Way Forward

      • Efficiency and productivity gains shall be brought centre-stage in the discourse, as the end-objective of transfer of resources to private sector.
      • Set up an empowered Disinvestment and Productivity Commission (DPC) to plan and execute the agenda, directly under PM.
      • The states should also be incentivised to pursue an effective privatisation programme for whatever little is left of the termite eaten state enterprises.
      QEP Pocket Notes