Privatisation in India
PRIVATIZATION IN INDIA : ISSUES AND EVIDENCE
(A doctoral dissertation proposal)
T.T.Ram Mohan
Visiting Faculty, Finance and Accounting Area
Indian Institute of Management
Ahmedabad, India
Abstract:
The proposed research is intended to survey the process of privatization in Indiaand assess its impact on the Indian economy. The central issue we will address isthe impact of privatization that has taken place so far on profitability andperformance of PSUs. Going beyond this, we will attempt to understand whatexplains the impact of privatization on performance. Is it the use of market powerby oligopolistic firms whose pricing power had been constrained under governmentownership ? Is performance bought at the expense of labour through extensive lay-offs so that what we see is essentially a transfer from workers to shareholders ? Orare we confusing the impact of privatization with the more generalised impact ofderegulation in the economy, which in itself could spur efficiency ?
The research output will comprise the following:
1.A survey of the literature 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.
I.
Background: privatization in theory and practice
A great wave of privatization has swept the world in the past two decades,embracing the industrial economies, the transition economies of East Europe andlarge parts of the less developed world, and it continues to roll 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
(A doctoral dissertation proposal)
T.T.Ram Mohan
Visiting Faculty, Finance and Accounting Area
Indian Institute of Management
Ahmedabad, India
Abstract:
The proposed research is intended to survey the process of privatization in Indiaand assess its impact on the Indian economy. The central issue we will address isthe impact of privatization that has taken place so far on profitability andperformance of PSUs. Going beyond this, we will attempt to understand whatexplains the impact of privatization on performance. Is it the use of market powerby oligopolistic firms whose pricing power had been constrained under governmentownership ? Is performance bought at the expense of labour through extensive lay-offs so that what we see is essentially a transfer from workers to shareholders ? Orare we confusing the impact of privatization with the more generalised impact ofderegulation in the economy, which in itself could spur efficiency ?
The research output will comprise the following:
1.A survey of the literature 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.
I.
Background: privatization in theory and practice
A great wave of privatization has swept the world in the past two decades,embracing the industrial economies, the transition economies of East Europe andlarge parts of the less developed world, and it continues to roll 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
References: 1.Adams, Christopher, Cavendish, William, and Mistry, Percy, Adjusting Privatization: Case Studies From Developing Countries, James Curry, London, 1992. 2.Bhaskar, V. (1992), “Privatization and the developing countries: the issues and the evidence Discussion Paper No.47, Geneva: UNCTAD. 3.Bishop, Mathew R., and John A. Kay, 1989, Privatization in the United Kingdom: Lessons from experience, World Development, 643-657. 4.Boardman, A and A. Vining (1989), “Ownership and performance in competitiveenvironments: a comparison of the performance of private mixed and state-ownedenterprises”, Journal of Law and Economics, 32, April. 5.Bourbakri, Narjess and Jean-Claude Cosset (1997), “The Financial and OperatingPerformance of Newly Privatized Firms: Evidence from Developing Countries,”mimeo 6.Caves, D., and Christensen, L., “The Relative Efficiency of Public and Private Firms in