Vijay Kelkar, Chairman of the Finance Commission of India recently wrote an article called ‘From Disinvestment to Privatization’ in the Economic Times in which he suggests that India has finally reached a stage where we should reassess the role of the public sector in meeting our country’s developing needs.
He rightly suggests that given the poor performance of most PSUs, our burgeoning entrepreneurship capabilities and our ability to enforce competition policies it is time to disinvest at least some sectors as long as we keep privatization as an end game plan.
Opposed to some lobbyists that propose the privatization of mostly all industries right away, Vijay Kelkar is more practical in his approach. He argues that as of today areas such as rural road construction which is unlikely to attract significant private investment should continue being run by the government. However, other industries which can operate in competitive markets like steel and cars and those sectors which can be regulated like the railways, banking and insurance should be left to the private sector. The government can then play the role its meant to play- that of a regulator.