Book contents
- Frontmatter
- Dedication
- Contents
- List of Tables and Figures
- Foreword
- Acknowledgements
- Chapter 1 Introduction: A Critical Look at Two Decades of Market Reform in India
- Chapter 2 Development Planning and the Interventionist State versus Liberalization and the Neoliberal State: India, 1989–1996
- Chapter 3 Predatory Growth
- Chapter 4 On Some Currently Fashionable Propositions in Public Finance
- Chapter 5 The Costs of ‘Coupling’: The Global Crisis and the Indian Economy
- Chapter 6 Theorizing Food Security and Poverty in the Era of Economic Reforms
- Chapter 7 Globalization, the Middle Class and the Transformation of the Indian State in the New Economy
- Chapter 8 The World Trade Organization and its Impact on India
- Chapter 9 The Changing Employment Scenario during Market Reform and the Feminization of Distress in India
- Chapter 10 Privatization and Deregulation
- Chapter 11 Macroeconomic Impact of Public Sector Enterprises: Some Further Evidence
- 12 Liberalization, Demand and Indian Industrialization
- Chapter 13 On Fiscal Deficit, Interest Rate and Crowding-Out
- Chapter 14 Going, Going, But Not Yet Quite Gone: The Political Economy of the Indian Intermediate Classes during the Era of Liberalization
- Contributors
Chapter 11 - Macroeconomic Impact of Public Sector Enterprises: Some Further Evidence
Published online by Cambridge University Press: 05 April 2014
- Frontmatter
- Dedication
- Contents
- List of Tables and Figures
- Foreword
- Acknowledgements
- Chapter 1 Introduction: A Critical Look at Two Decades of Market Reform in India
- Chapter 2 Development Planning and the Interventionist State versus Liberalization and the Neoliberal State: India, 1989–1996
- Chapter 3 Predatory Growth
- Chapter 4 On Some Currently Fashionable Propositions in Public Finance
- Chapter 5 The Costs of ‘Coupling’: The Global Crisis and the Indian Economy
- Chapter 6 Theorizing Food Security and Poverty in the Era of Economic Reforms
- Chapter 7 Globalization, the Middle Class and the Transformation of the Indian State in the New Economy
- Chapter 8 The World Trade Organization and its Impact on India
- Chapter 9 The Changing Employment Scenario during Market Reform and the Feminization of Distress in India
- Chapter 10 Privatization and Deregulation
- Chapter 11 Macroeconomic Impact of Public Sector Enterprises: Some Further Evidence
- 12 Liberalization, Demand and Indian Industrialization
- Chapter 13 On Fiscal Deficit, Interest Rate and Crowding-Out
- Chapter 14 Going, Going, But Not Yet Quite Gone: The Political Economy of the Indian Intermediate Classes during the Era of Liberalization
- Contributors
Summary
Public sector enterprises (PSEs) have been getting a bad press these days. They are widely perceived as an important reason for the increasing fiscal imbalance in recent years and for the widespread, and allegedly growing, inefficiencies in the non-farm sectors of the economy. A gradual reduction in the role of the public sector, especially in the sphere of production, is, therefore, widely perceived to be an integral element in the policy reform to restore sustainable – if lower, but consistent with the economy's real resources – economic growth.
In the context of the recent stabilization efforts and structural adjustment in India, the Statement of Industrial Policy (24 July 1991) stated: ‘Public enterprises have shown a very low rate of return on capital invested. This has inhibited their ability to regenerate themselves in terms of new investment as well as in technology. The result is that many of the public enterprises have become a burden rather than being an asset to the Government’ (emphasis added).
The ‘Programme for Structural Reform’ submitted to the IMF on 11 November 1991 to secure its financial assistance for the ongoing reform process stated:
India's severely constrained budgetary circumstances create both the need and opportunity for rationalising the scope of public sector activity, and for placing greater reliance on the private sector for resource mobilisation and investment. Public enterprises have absorbed large amounts of budgetary support for their expansion or operations, but in many cases they have failed to generate adequate returns on the investment of public money and contributed significantly to the public sector saving gap and fiscal deficit.
(Reproduced in Reserve Bank of India Bulletin, April 1992, p. 789, emphasis added.)- Type
- Chapter
- Information
- Two Decades of Market Reform in IndiaSome Dissenting Views, pp. 187 - 196Publisher: Anthem PressPrint publication year: 2013