Logo

Synopsis In India, PSEs are admired as well as derided. They are envied for their size and the patronage they enjoyed. At the same time, they are criticized for their inefficiency and lack of market-focus approach. They have multi-industry presence. The market capitalization of PSEs (including the Government owned Financial Institutions) is quite substantial.

The implementation of the disinvestment process during 1999-2005 was characterized by inadequate promotions, inordinate delays, frequent inter-ministerial disagreements, and lack of clear thinking and constructive intra-ministerial consultations. The process failed to attract FDI even in one case of disinvestment. It did not lead to creation of new entrepreneurs.

The book attempts to examine the performance of PSEs focussing on the financial and operating performance of ten disinvested PSEs with the help of a set of measures in per as well as post disinvestment periods. The ten PSEs, which were disinvested, showed different performances after disinvestment. It was mainly because of their varying financial and marketing strength before disinvestment, the strength of the strategic partners and the linkage benefits brought by them, the market power of the enterprise, and their degree of dependence on Government procurement after disinvestment. The results of the tests indicated that taking all the taking all the ten disinvested PSEss together, the difference in the values of various measures between the pre-disinvestment and post-disinvestment values were statistically insignificant.

The author argues that though dis-investment may not necessarily lead to improved performance, with adequate social safety net, it is still a desirable public policy objective as resources unlocked could be used for the more needy sectors. However, the resources released must not be frittered away on populist schemes.