How India is going Private?

Many structural changes have taken place in the economy over the past two decades -- a greater share for international trade in GDP, higher savings and investment rates, even increased investment in infrastructure.

One change that is intuitively accepted is the fact that the public sector is no more in the driver's seat; it has made way for the private sector. In other words, the shares of the public and private sectors have been virtually reversed. There are several reasons why India has gone 'private' -- but classical privatization is not one of them, though a handful of state-owned enterprises were sold to private interests by the Vajpayee government.

A more important reason for change is the opening up of new areas to private sector investment (telecom, aviation, banking, insurance, etc.), even as public enterprises in these sectors have been held back by ministerial interventions of various sorts.

Similarly, the Budget has been saddled with a variety of handout schemes that have prevented it from putting money aside for capital investment.
Most people welcome the greater competition and competitiveness that the advent of the private sector has introduced. Indeed, the higher economic growth rate may itself be a product of the shift from public to private.


Source|Rediff
Photo| Livemint.com