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Reform and Privatization of State-Owned Enterprises in India

Publication | December 2019
Reform and Privatization of State-Owned Enterprises in India

If public enterprises function like private sector organizations, very efficiently without actually privatizing the enterprises, they can satisfy the agendas of profit making and the social responsibility.

The economic reforms in India are notable because of the development of private enterprises that are free from functionary management. In this country, the public sector needs renovation, since it makes a crucial contribution to national investment and growth. We analyze partial privatization and restructuring of India’s state-owned enterprises (SOEs), which need more dynamic shaping. Central government SOEs have fostered their profitability, investments, and growth since India transferred to market-based prices and incentives with better contract enforcement. In the manufacturing sector, the profitability and efficiency of SOEs are superior to those of private enterprises. However, the performance of SOEs in services is poorer than that of their counterparts. Finally, we recommend policies to improve the performance of SOEs in India.

WORKING PAPER NO: 1057