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Unit 12: Privatisation and Economic Reforms

7. Videsh Sanchar Nigam Ltd. Notes
8. Indian Tourism Development Corporation
9. Hotel Corporation of India Limited
10. Paradeep Phosphates Limited
11. Jessop and Company Limited
12. Hindustan Zinc Limited
13. Maruti Udyog Limited (MUL)
14. Indian Petrochemicals Corporation Ltd.

Self Assessment

Fill in the blanks:
6. …………………… connote reducing government stake in the public sector.
7. Disinvestment involves the conversion of ……………… or securities into money or cash.
8. The performance of the …………………… was far from satisfactory.
9. …………………… of scale crept into the public sector.
10. The nine …………………… public sector enterprises (Navratnas) account for nearly 75%
of profits of all public sector enterprises.

Task Prepare an assignment on the success/failure of disinvestment/privatisation policy
by India till date.

12.3 Problems with Privatisation

In this section, you will learn about the problems in privatisation. The following reasons have
been identified in this regard:
1. Absence of Strategy: There is no proper strategy for disinvestment. There were no
pre-defined standards, norms, or procedures relating how to disinvest, when to disinvest,
what to disinvest, and to whom to disinvest.
2. Unclear Objectives: There were no clear goals, whether it was to meet fiscal deficit, to
create revenue, to make them more competitive, to increase productivity, etc.
3. Improper Timing: The government was not focussing on the timing of disinvestments and
consequently, most of the private sector investors are shying away from the process
because of unattractive proposals made by the government. Due to wrong timing, several
PSUs were privatised at low price, such as ITDC, Maruti, etc. A good price can be achieved
if privatisation is done when the performance, market capitalisation and the industry
prospects are good.

4. Difference of Opinion: There was no consensus over the disinvestments among the several
political parties.
5. Lack of Proper Labour Strategy: Prior to foraying into disinvestments, labour was not
taken into confidence. No proper strategy was constituted for their redeployment, training
and development. There was labour unrest in BALCO on the issue of disinvestment, and
a countrywide strike in PSU banks on the issue of privatisation and consolidation.

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