DMPQ: In India still after 1991 reforms there is ambivalence towards private sector. Explain with the example( Economy)

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Private sector is perceived to be guided by profit maximisation and it was considered to be anti to the objective of independent India. Hence socialism was seen as an alternative to it. This deep rooted notion about private sector is more in India. Following examples are testament to it:

 

  1. In civil aviation sector, there is still the commitment to make the perennially unprofitable public sector airline “world class”. Policy reform in the sector has been animated as much by an interventionist as liberalizing spirit, reflected in restrictions on pricing.
  2. In banking sector, discussion of disinvesting the government’s majority stake in the PSBs is often difficult in part because of the view that they are legitimate instruments for the state to allocate and redirect resources.
  3. In the fertilizer sector, rife with distortions, public policy finds it easier to rehabilitate public sector plants than to facilitate the exit of egregiously inefficient ones.
  4. The reluctance to privatize, the ambivalence towards the private sector is manifest in many other ways too in agriculture sector:

 

The agriculture sector is tangled in the regulations, a living legacy of the era of socialism. The producers in many states are still required by the APMC to sell only to specified middlemen in authorized mandis only. Though some states have shown progress by taking the perishables out of the list, but there is a long way to go.

 

When this system still generates price increases which are considered excessive, the Essential Commodities Act is invoked to impose stock limits and controls on trade that are typically pro-cyclical, thereby exacerbating the problem

 

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