In India the path chosen to reform the public sector has been to first deregulate and liberalise the economy and then to privatise public sector enterprises. Debates have raged on since then on: whether reform of state-owned enterprises is necessary; the choice of strategy and method; and the social and economic consequences of such policies. Sudhir Naib has incisively analysed, from a theoretically informed perspective, crucial aspects of this topical issue. Among the important aspects he discusses are:
- whether the failure of Indian public enterprises has been exaggerated.
- can public enterprises be reformed from within or are they intrinsically inefficient?
- is a change in ownership the only solution?
- impact of ownership and competition on the efficiency of Indian enterprises.
- methods of privatisation and the experience of other countries.
- impact of divestiture on performance of disinvested enterprises.
Dr Naib provides a firm-level analysis through case studies of seven partly disinvested enterprises (SAIL, BHEL, IOC, ITI, BEL, BEML, NFL). Impact of post-reform policies on enterprises is analysed in terms of changes in market share, cost structure, profitability and work culture. The strategic response of these enterprises is examined in terms of cost reduction measures, change in product portfolio, restructuring, innovation and institutional arrangement for diagnosing environmental changes.