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The transformation of India's public sector: the political economy of growth and change

  • This paper examines the paradox of the diminishing institutional role of large central public sector enterprises despite rising profitability and iestment as a result of their being efficient competitors in the new market eironment. Under the neo-liberal regime of the last two decades, these CPSES, with large cash balances and improved profitability, have emerged as the main drivers of public savings and iestment. But instead of enhancing their strategic role, the union government has been treating them as cash cows. A comparison of the performance of large private and public sector firms in the manufacturing sector shows that the CPSES have provided higher returns on capital employed. And, performance in terms of technical parameters is in no way inferior to that of their private counterparts. Yet the Modi government intends to either privatise these CPSES or sell a significant part of their equity shares, a decision that is devoid of both strategic and business sense.

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Document Type:Article
Author:Sushil Khanna
Chairs and Professorships:Chair of Corporate Responsibility and Governance
Year of Completion:2015
In: Economic and Political Weekly, 50 (2015) 5, 47-60