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Indian Economy

Notes 6. Wrong Objectives: The entire incomes of disinvestments are being used to mitigate fiscal
deficit instead of utilising them for development of the social sector and building
infrastructure.
7. Opaque: Lack of transparency in the entire process raises various eyebrows of many and
has become a big hurdle.

8. Lack of Marketing: The government has done little and was unsuccessful to attract foreign
suitors for the disinvestment process in India.

You may already be aware that the whole disinvestment programme seems to have been executed
by the government in a hasty and hesitant manner. Neither the opposition nor the workforce
was assured before disinvestment. It was in the year 1998-99 when Prime Minister Atal Bihari
Vajpayee made a statement in parliament about disinvestments,
“Disinvestment/Privatisation is the only panacea for ills of loss-making public sector undertakings.”

The opposition response was:
“You can’t sell the family silver to meet your daily expenditure.”
You must keep in mind that the outcome of the privatisation so far has been unsatisfactory. Only
35 per cent of the targeted figures have been attained in the decade 1991-92 to 2001-02. Though 49
companies have been disinvested but in reality, only few have been genuinely privatised. On
the other hand countries like Taiwan, Hungary, Thailand, Philippines, Turkey, Poland, Korea,
West Asia, Eastern Europe, and even China have been very successful in privatisation. The
privatisation plan depends critically on what we plan to do with the money earned through
privatisation. To conclude in words of S. Venkitaramanan:

“At least in India, PSUs are surviving as units with government majority. Our effort should therefore, be
to make public sector units work efficiently rather than to cook up gimmicks to enable them to get around
their impediments by reducing public ownership.”

Self Assessment

Fill in the blanks:
11. The entire …………………… seems to have been carried out by the government in a hasty
and hesitant manner.
12. Neither the …………………… nor the workforce was taken into confidence before
disinvestment.

12.4 Economic Reforms

In this section, you will study about the economic reforms in India. With simple ideas that do
not require big bang reforms, India can weather the storm caused by global and domestic
economic factors.
There are ways of looking at India’s present economic woes marked by a rapid fall in the value
of the rupee caused by persistent inflation of the past few years and the high current account
deficit (CAD) of about $85 billion (4.5 per cent of GDP) which needs to be funded through
uncertain capital inflows year after year. The description of the present crisis by various economic
and political analysts by itself tends to carry shades of ideological bias. Some well-known
economists on the far right prefer to describe the external sector situation as worse than the 1991
economic crisis India had faced. This narrative suggests the 1991 crisis was marked by a severe,
external sector crunch and it acted as a trigger for the big bang reforms of the early 1990s.

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