Privatisation programme in Britain and East European countries: some lessons for India

Abstract

In 1979, when the Conservative party was elected in the UK, it was no more than a gut feeling, impatience and inability to improve the working of the nationalised industries, it was felt that the invisible hand of the market may hold the key to success of these industries. Nevertheless, on surface it was projected by the Party and the government that the present value of aggregate net benefits to UK consumers would be higher when the state owned companies would be under private management. In India, the debate about improving the performance of PSUs started as early as late seventies as PSUs were not generating enough resources and as a whole were a drain on the public ex-chequer. The main issues in this debate, in India, are private vs public ownership, valuation of public enterprise shares and exit policy for labour and enterprises. A successful privatisation programme shall not only unshackle the economy but also give more time to politicians to concentrate on managing the economy rather than meddling in day to day affairs of business enterprises.