(Sample Material) Gist of Important Articles from IIPA Journal
Topic: Privatisation and Public Enterprises in India: Issues of Policy and Implementation C.V. Raghavulu
THE CONCEPT OF LIBERALISATION
The Concept
Privatisation has come to be used as an omnibus term for heterogeneous policies and a mixed bag of ideas. In the broad context of liberalisation, privatisation refers to policies aimed at bringing the operations of enterprises within the discipline of market forces: thereby implying a shift from public domain to the market arena.
According to V.V. Ramandham, privatisation covers a wide continuum of possibilities, between denationalization at one end and market discipline at the other. There can be a sale of the enterprise in full; or, private capital may be introduced in public enterprise either through a sale of some government equity or in the course of its expansion. The larger the private equity proportion the greater the degree of privatization. Liquidation represents the ultimate, step in the arsenal of the owner. It may imply, in practice, a sale of the use them again in the-same activity or moves them away from their erstwhile activity. A management buy-out is a special version of denationalization. It represents the sale of assets to the employees who, with appropriate loan provisions, take over the, ownership. This, could be a cooperative, if the distinctive legal features of a cooperative society are satisfied by the organisation that buys the enterprise or the assets.
In most cases, the criteria for privatisation in the sense of denationalization have not been derived from a specific evaluation of the comparative advantage of the public enterprise concerned. Several results ensued. First, the criteria have varied from country-to-country. Second, what appear to be proxies for the comparative, advantage criterion do not invariably have that value. Third, periodic change easily occur in the listing or otherwise of an enterprise as a candidate for denationalization, partly on grounds of bureaucratic or political preferences.