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Unit 12: Privatisation and Economic Reforms

4. In the present scenario, it will be easy for us to get international client for bulk drug Notes
supplies as other economies have to also liberalise their import procedures.
5. Each year, more than 1000 new drugs get off patent. We will not supply these drugs
to international market rather we will also launch them under our brand. Our
competitive advantage will be the cost structure as we will be operating on the
economies of scale because of our bulk drug supplies.
6. Our biggest advantage is our Marketing. MNCs may have an advantage on the
patented drugs but they cannot compete with us in our land on the off patented
drugs. They can’t give the margins which we can give to retailers, they can’t even
think of incentives which we can provide to the doctors. They cannot penetrate in
the rural areas. Their sales cost is very high”.
He further added that “we have just received an order of ` 100 crore per annum. In the
current scenario, we may get many such orders. We have to restructure the organisation
for the new environment and we have to design our plant to the international scales and
Quality standards”. With optimism in his eye, Mr Mohan gave a ring to his GM Production
and GM Finance to work out on the cost structure and financing of restructuring.

Questions
1. In the above case, discuss the impact of globalisation on the decisions of Morphene.
2. Discuss how globalisation is an opportunity for Morphene.
Source: Business Environment, Dr Vivek Mittal, Excel Books

12.5 Summary

Privatisation is the process of involving the private sector in the ownership or operation
of a state-owned or public sector undertaking.
Privatisation can take three forms, i.e., Ownership Measures, Organisational Measures
and Operational Measures.
The New Industrial Policy has reduced the number of industries reserved for the public
sector from 17 to 8 (further reduced to 4 and then to 2) and emphasised the introduction of
selective competition in the reserved area.
In 1991, public sector units have also been brought within the jurisdiction of the Board for
Industrial and Financial Reconstruction (BIFR).
The concept of MOU was introduced to make the PSUs more accountable. The main objective
of the MOU is to reduce the quantity of control and increase the quality of accountability.

The disinvestment programme started in 1991-92 connotes reducing the government stake
in the public sector. Disinvestment may or may not lead to privatisation, i.e., transfer of
control in private hands.
The government may only dilute its equity and raise resources to meet the social needs of
the people.

For the Navratna PSUs, the government followed the policy of giving them more autonomy
and increased their productivity through restructuring.

The National Common Minimum Programme of the new government contains clear
policy guidelines regarding disinvestment in PSEs. But it does not have a liberal policy
regarding disinvestments.

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