Privatization: Empowering Public Enterprises

Enhancing Financial Discipline and Modernisation

Privatisation, a strategic concept in governance, involves the transfer of ownership or management of government-owned enterprises to private entities. This transformation can occur through two distinct approaches: (i) by the government's complete withdrawal from ownership and management of public sector companies or (ii) by the outright sale of these entities to private investors. The process of selling off a portion of the equity of public sector undertakings (PSUs) to the public is termed as disinvestment.

The primary objective behind the government's initiative to privatise public sector undertakings is to foster financial discipline and facilitate modernisation within these enterprises. Furthermore, the government envisions that by leveraging private capital and managerial expertise, the performance of PSUs can be significantly improved. Additionally, privatisation is seen as a means to attract foreign direct investment (FDI), thereby infusing the economy with much-needed external funds.

To enhance the efficiency of PSUs, the government has endeavored to grant them greater autonomy in making managerial decisions. To this end, certain PSUs have been conferred special status as "navaratnas" and "mini ratnas," bestowing upon them a higher degree of independence and flexibility in their operations.

In conclusion, privatisation represents a pivotal strategy employed by the government to optimize the performance of government-owned enterprises. By divesting ownership and management control to private entities, the government aims to bolster financial discipline, encourage modernisation, and attract foreign investments. Furthermore, the granting of increased autonomy to select PSUs underlines the government's commitment to fostering efficiency and productivity in these crucial sectors.