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Critically analyse India’s policy of aggressive privatisation of public enterprises.

Topic: Effects of Liberalization on the Economy, Changes in Industrial Policy and their Effects on Industrial Growth

6. Critically analyse India’s policy of aggressive privatisation of public enterprises. (250 words)

Reference:  The Hindu

Why the question:

The article explains how Privatisation has the potential to alter the functioning of the Indian economy.

Key Demand of the question:

The question is straightforward, one must critically analyse India’s policy of aggressive privatisation of public enterprises.

Directive:

Critically analyze – When asked to analyse, you have to examine methodically the structure or nature of the topic by separating it into component parts and present them as a whole in a summary. When ‘critically’ is suffixed or prefixed to a directive, one needs to look at the good and bad of the topic and give a fair judgment.

Structure of the answer:

Introduction:

Start with what you understand by privatisation and briefly highlight the trends associated with it.

Body:

Explain that in the backdrop of an economic contraction, it is important to revisit the aggressive privatization of public enterprises. Focus should be on adopting different strategies for sick and profitable units.

Privatization of the public sector, including banks, has been part of economic reforms since 1991. This was at the core of the ‘Washington Consensus’ which believes that the private sector is inherently more efficient.

The socio-political realities of India prevented outright privatisation. However, progressive disinvestment of the shares of public sector undertakings has been taking place over the years.

Discuss the concerns associated with strong and aggressive privatisation.

Conclusion:

Suggest what needs to be done and conclude with way forward.