Is Privatisation of PSU Good or Bad for India?

Is Privatisation of PSU Good or Bad for India?

Disinvestment of Public Sector Undertakings (PSUs) is an avowed policy of the Union government. With the dismal track record of several PSUs, the Centre cannot be blamed for the decision to disinvest. Gone are the days of the Nehruvian euphoria for creating PSUs with their ‘commanding heights’.

Did PSU’s ever help us?

Times have changed and the economy now has other engines of growth. But it should not be hastily inferred that all PSUs have failed us. In the initial decades after Independence, when the private investment of substantial magnitude was scarce and timid, core PSUs kick-started India’s economy and provided a robust framework for economic growth.

Do we still need them?

Providing employment was one of the objectives, though not the paramount one. Nevertheless, in the years that followed, several PSUs became white elephants serving neither a social nor economic cause. Many of them naturally became black holes for public money. They were often textbook cases of poor management and aggressive trade unionism and became umpireless playfields for political parties with myopic objectives.

In fairness, it should be mentioned that Central government PSUs are a shade better than several state PSUs, most of which lead to a blatant parasitical existence.

Where did it all start?

By 1991 when the country embarked on the policies of liberalization, privatization became a natural credo. Selling off unviable PSUs and phasing out those from areas where the private sector can provide better and cheaper goods and services was imperative. Governments since then have sold several units either fully or partially.

What is the rational Justification behind disinvestment?

There always has been a rational justification in disinvestments so far. For instance, it was argued, and rightly so, that the government need not be in tourism, hotel industry, consumer goods manufacturing, automobiles, and such sectors where private players can provide consumers with abundant choice. The argument was the government could utilize the money gained by selling off PSUs to improve services in public goods like infrastructure, health, and education. It was widely held in the nineties that the state needs to concentrate on these areas aimed at human resource development that would facilitate and accelerate economic growth.

What do people think of this?

The poll called 'Mood of the Nation' (MOTN) asked respondents to assess the central government's decision to privatise Bharat Petroleum Corporation Limited (BPCL), Air India and Shipping Corporation of India. As many as 44 per cent people supported the Centre's privatisation drive, while 39 per cent opposed the government's decision to sell its majority stake in the Public Sector Units (PSUs). Whereas 17 per cent either didn't know about the government's privatisation policy or were not sure about it.

Conclusion: PSU’s were the need of the hour when our country was young, In recent years, PSU’s have become a burden on the government and have not helped it in any way. So I believe that it is in the best interest of the nation that PSU’s are privatised.

I hoped you liked my answer and I apologise for any unintentional error.

Jay Hind!

Thanks for reading.