Public Sector

Privatisation is an evocative subject even in the developed economies. In a developing economy like India, with its tradition of successful and pervasive public intervention, it generates unique mind-blocks. Its implementation therefore requires persistent, persuasive zeal. However, the compulsions of ensuring higher levels of investment at progressively higher levels of efficiency and productivity require a complete restructuring of the economic environment. Low levels of public savings, inadequate competition and low export orientation are barriers which need to be transcended. Privatisation and liberalisation of the licensing regime for Foreign Direct Investment are two initiatives which can meet the objectives of efficiency enhancement, domestic and foreign resource mobilisation and incremental capital outlays. The pace of privatisation has quickened since 2000. The adoption of a strategy of block sale of government stock in identified PSEs to a strategic partner, along with transfer of management control, as opposed to market sale of shares in small lots, has enhanced the value received by the government through disinvestment. It also ensures that these assets are put to productive use in the most optimum time frame and with the maximum benefit. While it is too early to quantify such benefits, there is sufficient anecdotal evidence of significant welfare gains for employees, institutional investors and the economy, along with the quantifiable gains for government, from the additional resources freed by the sale of PSEs.

There is now very great need and scope for public sector planning in which district level planning must have a very important place. There is not only need but now a much greater possibility of transferring much larger resources to district level planning. Such plans, as D R Gadgil argued and his Wardha Plan demonstrated, have to be prepared with the help of experts and local level representatives and concerned people. The development needs of the vast rural India require this. Social scientists, activists as well as the Planning Commission and the state governments should now start afresh on this vital task.

While presenting his government's budget for 2002-03, the Maharashtra finance minister has made a number of major policy pronouncements intended to set the finances of the state in order. This may be music to the ears of reformers, but two things need to be kept in mind. One, similar pronouncements have been made in the past on some matters, but the government has failed to carry them out. Two, one must look at the fine print before rushing to judgment.

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