Economic Survey on Tuesday candidly admitted difficulties in privatisation efforts for public enterprises saying all states, all societies, have some ambivalence toward the private sector adding there is still a commitment to make the perennially unprofitable public sector airline a ‘world class entity.
Giving out the example of civil aviation, the survey said privatisation of public enterprises remains difficult even for firms with a strong case to be privatised, though the reform talks in the sector is animated by discussions of as much an interventionist as liberalising spirit” as reflected in restrictions on pricing.
The Survey didn’t mention national carrier Air India directly-- which is trying to stay afloat on a Rs 30,000 crore financial package and clamours to privatise the airline, Government has so far desisted from taking a view in this regard.
Even Former Finance Secretary and well known economist Vijay Kelkar, who has straddled the public policy space for nearly 40 years, while delivering a 5th CD Deshmukh Memorial lecture in the capital last week ,had called for privatisation of State-run firms such as Air India (AI) and Steel Authority of India (SAIl).
“To me, the promotion of competition is the uppermost reason to promote the policy of privatisation of public sector firms like Air India and Steel Authority of India (SAIl).The presence of such public sector players with deep pockets and soft budget constraints distorts competition and leads to an inefficient allocation of national resources,” he had said.
The Economic Survey 2016-17, tabled in the Parliament on Tuesday, said, “all states, all societies, have some ambivalence toward the private sector”.
After all, the basic objective of private enterprises -- maximising profits -– does not always coincide with broader social concerns, such as the public’s sense of fairness, the Survey said while adding that the ambivalence in India seems greater than elsewhere.
Noting that this ambivalence toward the private sector is manifest in multiple ways, the survey said the most well-known example is the difficulty of privatising public enterprises, even for firms where economists have made strong arguments that they belong to the private sector.