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  • Raajveer Singh Bisht

Selling the Nation

The gradual dilution of public sector operations to private investors threatens the poor.

India’s public sector has gradually been sold out to private investors with the goal of government disinvestment. It has been hoped that the public sector will perform better if put under the same competitive spirit of private enterprises. In doing so is the government restricting access of commodities to the poor and marginalised.


Gradually the hold of private firms and individuals on public sector enterprises has increased and this has been regardless of the government in power. The NDA and the UPA both have followed a policy of disinvestment and so the issue has not been perceived as a political one rather as one based fully on economic tangents. This however, does not give the policy of disinvestment a clean chit by any yardstick.


To understand disinvestment we must first recall the 1991 economic crisis. This shook the

Indian fiscal mechanism to its very core and led to major overhauls and privatisation within the nation. Economic liberalisation was brought in to end the fiscal deficit as well as provide the public sector a competitor in the local markets. Since then as the public sector has been time and again beaten back by its private rivals in the market the government has chosen to liquidate its stake in said enterprises.


The first thing we must realise is that the perception of public sector enterprises being perfect examples of inefficiency is not only false but also ignores the actual performances of public sector enterprises in the market. The relation of ownership (government or private) and performance is not at all lucid and is in fact deeply marred by disagreements within the community of experts.


Why is the government then pushing forward with disinvestment and privatisation? The first explanation relies on establishing that there is in fact a nexus between the government and wealthy private firms both domestic and international. These firms wish to control public sector enterprises and thus knock them out of the direct competition while also overhauling them towards profit-centric policies. The government sees this as a chance to not only reduce its massive stake in said firms but also revitalise them and shape them up for better performance.


Another explanation is that the government wishes to wash its hands clean of these enterprises and instead let the market function autonomously under private firms and thus move us towards a complete capitalistic market.

Both of these explanations do have inside them several tidbits of truth and perhaps a mixture is the best possible explanation of the government’s steady liquidation of public sector enterprises.


The consequences of this privatisation would however be crippling to the poor. It would bring them in contact with market prices and destroy the welfare mechanisms of the state in various aspects. Essentially even the public sector would gear itself for profit maximisation which was never the real goal of such enterprises. Instead of the service they provide to the downtrodden of the nation they would instead chase after the middle and upper class bracket and eventually abandon all of its original characteristics of welfare, social service and poverty alleviation.


Nation like ours still grapples with deep rooted poverty which has complex social origins and in such a condition if our government and the state machinery starts to rescind back from its welfare initiatives we only further the grip of poverty on the downtrodden of our nation.

We look with awe towards nations such as the United States with its long standing attitude of free market and its absolute disgust towards the public sector and we conclude that economic prosperity comes from such actions. We ignore the fervour-filled calls of the middle and lower classes of that nation as they demand for further and further state sponsored programmes.


Our public sector helps support many lives in our nation and is the backbone on which many families undertake the journey of economic progress, for the sake of cutting expenditure our government should not abandon these enterprises which are quintessential to the mixed economy of India.


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