The paper holds a discussion on the prospects of Privatization in India today. It suggests that privatization as such is no longer an issue in the country. The issue today is how best to carry the process forward and the priorities for privatization. It highlights that the only hurdle to privatization is created by opposition from administrative ministries. Exigencies, and political processes make it virtually certain that the spirited push today for privatization would not always continue without a radically different approach to privatization. Moral hazard from privatization include, aside form the obvious political pressures, complex and dynamic optimality of privatizing: the speed of privatization, social optimality, optimality of the particular privatization, timing, meticulousness with regard to the process, information basis of the bids, postprivatization commitments, strategy in the privatization process, besides the choices of methods exercised, the changes in the policy environment governing the industry and even the economy are all interrelated. There are other moral hazards in governments being involved in the day-to-day aspect of privatization., such as, monetary policy linkage, asymmetric cost of capital, asymmetric risk perception, and low bid arise. Resulting market ought to be competitive/well regulated, policy quirks need to go, distortions in the oil sector need to go, de-reservation needs to be introduced (especially for products in the small scale industry), and problems in bank privatization need to be addressed. Moreover, the way forward would include an independent commission under law, strategic sale, buying out IPPs, being market friendly, and encouraging employee stocks and cooperatives.
Privatisation Today: A Discussion
Author : Sebastian Morris