We should not forget the equity dimension of PSU privatization
For privatization to be successful, widely accepted and in the public interest, stakeholder mapping should be vastly expanded to cover all sections of society that will be affected by the reforms
Prime Minister Narendra Modi’s statement that “the government has no business to remain in business" is the clearest articulation of the reason why India must privatize the hundreds of public-sector enterprises that its Union and state governments run. In doing so, he departs from earlier prime ministers, who preferred incremental dilution of government shareholding, or a cautious one-by-one approach in the sale of public enterprises. The invention of the term ‘disinvestment’, which for two decades has been used to describe the privatization of public sector enterprises in India, showed both a lack of clarity of purpose on the part of previous governments and also their need to apologetically cloak the policy against criticism from ideologues across the political spectrum. It is to Modi’s credit that he has decided to use his political capital to declare that privatization of public sector enterprises is in the national interest and thus ought to be carried out whole-heartedly. This is a welcome break from the past.