Public Sector Enterprises in India. Political Economy of their (intended) demise and resurrection
BRICs seminar, with
prof. at Indian Institute of Management de Calcutta and currently Directeur d'Etudes Associé at FMSH.
Discussed by Giovanni Balcet, prof. at University of Turin , also Directeur d'Etudes Associé at FMSH.
This talk examines the paradox of the diminishing institutional role of large central public sector enterprises despite rising profitability and investment as a result of their being efficient competitors in the new market environment. Under the neo-liberal regime of the last
two decades, these PSEs, with large cash balances and improved profitability, have emerged as the main drivers of public savings and investment. But instead of enhancing their strategic role, the union government has been treating them as cash cows. A comparison of the performance of large private and public sector firms in the manufacturing sector shows that the PSEs have provided higher returns on capital employed. And, performance in terms of technical parameters is in no way inferior to that of their private counterparts. Yet the Modi government intends to either privatise these PSEs or sell a significant part of their equity shares, a decision that is devoid of both strategic and business sense.