Indian Privatization
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 India
and assess its impact on the Indian economy. The central issue we will address is
the impact of privatization that has taken place so far on profitability and
performance of PSUs. Going beyond this, we will attempt to understand what
explains the impact of privatization on performance. Is it the use of market power
by oligopolistic firms whose pricing power had been constrained under government
ownership ? Is performance bought at the expense of labour through extensive layoffs
so that what we see is essentially a transfer from workers to shareholders ? Or
are we confusing the impact of privatization with the more generalised impact of
deregulation 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.
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T.T. Ram Mohan, Indian Institute of Management, Ahmedabad
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 and
large 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...
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