Privatization in India Essay

Ram Mohan Visiting Faculty, Finance and Accounting Area Indian Institute of Management Ahmedabad, India Abstract The proposed research is intended to survey the ferment of privatization in India and assess its stir on the Indian economy. The central trim down we will address is the shock absorber of privatization that has taken place so far on profitability and exploit of PSUs. Going beyond this, we will attempt to understand what explains the tinge of privatization on performance.Is it the use of market power by oligopolistic squares whose pricing power had been constrained under government ownership ? Is performance bought at the expense of labour through extensive layoffs so that what we chatter is essentially a transfer from workers to shareholders ? Or are we confusing the impact of privatization with the more generalised impact of deregulation in the economy, which in itself could sticker efficiency ? The research output will comprise the following 1. A survey of the l iterature on privatization, particularly with respect to less developed countries. 2.A review of the role of the public sector in the Indian economy, and the process of economic liberalization and privatization in India upto this point. 3. Impact of privatization on firm performance. 4. Explanation for the impact of privatization 5. Assessment of mechanisms of corporate governance in India. -2- I. background knowledge privatization in theory and practice A great wave of privatization has brush the world in the past two decades, embracing the industrial economies, the passageway economies of East Europe and large parts of the less developed world, and it continues to trudge on.It is interesting, however, that its basis in theory was somewhat shaky to start with. Moreover, a sizable enough body of empirical evidence, on which hypotheses about its impact could be tested, became available only several years down the road. So much of the initial impetus to privatization entailed a le ap in faith, and, as happens all too often in the development of knowledge, attempts to explain its impact have followed on the heels of widespread existing practice.