Reforming indian public sector enterprises

This paper focuses on the various modalities of reform options available to Indian policy makers in order to improve the performance of its public sector enterprises. Specifically, it discusses three such reform options viz. Divestiture (whereby private ownership is inducted in publicly owned enterprises), Greenfield Privatization (whereby private sector is allowed to come and compete in areas hitherto reserved for public sector), and Cold Privatization (that is granting greater autonomy to managers of public sector enterprises by making them sign Memorandum Of Understanding). The paper concludes by stating that factors which enhance the level of competition in an economy may be a more important determinant of efficiency than a change of ownership per se. The emphasis, therefore must be towards creating a more competitive environment than merely transferring the ownership of assets from the public to the private sector.