Modi takes the bull by the horn in privatizing public enterprises
New Delhi, Sep 11:Debunking the argument that the sale of public enterprises is like selling the family silver to pay grocers’ bill, Prime Minister Narendra Modi has rightly taken the “bull by the horn” to privatize the public sector undertakings, many of whom have outlived its utility.
“There is no merit in the argument that off-loading public enterprises are like selling the family silver to pay
the grocers’ bill,” argues veteran journalist K R Sudhaman in his book on the public sector, which justified
the Modi’s decision to go for big-ticket public sector reform, a pending agenda since the liberalization of
the economy in 1991.
Family silver is meant to bail out during rainy days. “India did pledge its gold to prevent default in global
payments. It did get its gold back and perhaps a little more when the situation improved,” says Sudhaman, who traces the history of the public sector since independence in his book brought out by Har-
Modi is certainly on the right track as there is a need to unlock the value of public enterprises which is Rs 10-
12 lakh crore. “This will also ensure that enterprises are run efficiently to leapfrog in economic
Analyzing various good, bad and ugly aspects of public enterprises, the book while highlighting the
the merit of the public sector, Sudhaman points out why public enterprises should get out of non-core business
and selectively in the core business to ‘inject competition, efficiency and garner resources for
Air India was rightly formed by taking over private airlines in the 1950s as World over airlines were in
public sector at that point of time because of security considerations and the huge investment involved
for running an airline, Sudhaman says adding it was regrettable that when open sky policy was
adopted globally, the government failed to privatize quickly as was the case elsewhere. This was detrimental
to the airlines and became a perpetually loss-making organization, which at one time was top class
Many public enterprises were set up to deal with difficult times and because the private sector was not
forthcoming to invest in those areas in the early stages of development. But unfortunately, the problem
was public enterprises could not exist when it has fulfilled its objectives and outlived its utility.
To cite an example, Modern Bread was rightly set up in an era of food shortages but when India became
surplus in food grains, thanks to the green revolution, private bakeries started mushrooming all over the
country. This was the time Modern Bread ought to have exited the business and that did not happen
and much later it was sold for a song when it became the patently unviable company to check further losses.
Sick private textile mills were nationalized in the 1970s to protect jobs in this labor-intensive industry
at a time when jobs were scarce. But when the industry started booming after economic liberalization,
the government had a painful experience in exiting as there was no exit policy. Also, vested interests in trade
unions exploited the situation hurting the economy, Sudhaman stresses.
Modi takes bull/Modi takes bull /Modi takes bull
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