Selling off public sector enterprises could be the key to strengthening a sluggish economy, writes Subir Bikas Mitra. Will a new privatization drive succeed where earlier attempts have failed?
Aatma Nirbhar Bharat Abhiyaan (ANBA), which literally means self-reliant India mission) is the vision of Prime Minister Narendra Modi to build an autonomous nation against vigorous global competition. But a self-reliant India should not be construed as cutting the country off from rest of the world.
So, just what are the benefits of ANBA (another Make in India initiative) with specific regard to disinvestment of public sector enterprises (PSEs) through the Department of Investment and Public Asset Management? And how will applicable laws and regulations change with this reclassification process?
A brief history
Modi underlined his vision to make India a self-reliant nation based on five pillars – economy, infrastructure, system (technology-driven arrangements), vibrant demography and demand.
In 1948, the industrial policy envisioned a greater role for the government in all areas/sectors and categorized them as:
- Exclusively controlled by the government, e.g., manufacture of defence equipment, atomic energy and railways;
- Government and private sectors co-existing, e.g., coal, iron and steel, aircraft manufacturing, ship building, telephone manufacturing, telegraph and wireless apparatus, and mineral oils; and
- Other sectors where the government can only enter to enhance growth.
However, the government has entered various sectors and industries that are not under its control, such as fertilizers, tourism, chemicals, information technology, construction, pharmaceuticals, etc. This created stress on the public purse, as many of these industries have been hit by financial trouble due to things like changing technologies, user habits or intense competition from private enterprises. The government had no option but to try to enhance growth and this was only possible by opening more areas for private companies.
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