disinvestment :: essays research papers

DISINVESTMENT OF PUBLIC SECTOR UNDERTAKINGS IN INDIA TODAY THE RUSSIAN ECONOMIC MODEL OF DEVELOPMENT CONNOTED THROUGH THE RUSSIAN FUR DOES NOT EXIST. TODAY THE CHINESE ECONOMIC MODEL OF DEVELOPMENT CONNOTED THROUGH THE MAO SUIT DOES NOT EXIST. Margaret Thatcher disrobed them. The concept of the GOLDEN STRAIGHT JACKET is avowed, to whether it were the Democrats or the Republicans, the Conservatives or the Laborites, the BJP or the Congress. The concept of the golden straight jacket has been embraced by all countries including India. It endeavors to shift the economic decision making from the government to the markets. The concept of Disinvestment being it’s major tenet. The Nehruvian temples of economic growth, better known as the Public Sector Undertakings were born as the outcome of the conscious policy of the government to speed up industrialization of the country with a view to giving added impetus to economic growth as well as achieve certain socio-economic goals. These undertakings account for  ¼ of our GDP. They also account for 1/3 of our exports and have made contributions to import substitution. Also government undertakings employ more than 70% of the workers employed in the organized sector. These undertakings have helped reduce imbalances in regional development and a few of them have earned reputation for excellence at international level. But the picture is not as rosy as it seems, rather the scene in most of the PSU’s is very chilling. According to figures upto March ‘99 losses incurred by 29 PSU’s trebled within one year from approx. Rs.1050 crores to Rs. 3600 crores. The major reasons for the non performance of the PSU’s can be summarized as: Political Interference, High Cost of Delay, Fear of Scams, Headless Plants, Ineffective Management, Huge Inventories, Trade Unionism and Unutilized Capacities. A comprehensive policy on public sector was set out in the Industrial Policy Statement of July 24, 1991 - the year when the country had to tide over an unprecedented economic crisis reflected in its internal and external finances. The steps adumbrated included a review of public sector investments to focus on strategic and essential infrastructure enterprises and new procedures to tackle chronically sick and loss-making units. â€Å"Rationality is least expected from an economist who is best defined as a man who tells you tomorrow why the things he predicted yesterday did not happen today.† The DEPARTMENT OF DISINVESTMENT has the following rationale: Because of the current revenue expenditure on items such as interest payments, wages and salaries of Government employee and subsidiaries, the Government is left with hardly any surplus for capital expenditure on social and physical infrastructure.