A change of course on privatisation
By T T Ram Mohan
India’s Budget for FY22-23 has signalled that the government will proceed cautiously on privatisation. Would-be reformers will denounce the change of course as a huge setback to reforms. It is, in fact, a move that acknowledges the realities of India’s political economy.
The Budget sets a modest target for privatisation of Rs 65,000 crore. This is way below the target of Rs 1.75 trillion for FY21-22. Receipts for FY 21-22 are expected to be Rs 78,000 crore, much of which will be accounted for by disinvestment in LIC. It will not come from privatisation or the transfer of ownership and control, which the Budget for FY21-22 had emphasised and for which it was lustily cheered. There is no mention in this year’s Budget of the privatisation of two banks or one insurance company, which were talked about last year.
Privatisation enthusiasts will see this as a serious let-down after the successful privatisation of Air India this year. They overlook the fact that Air India’s privatisation was initiated in 2018 and took four years to conclude.
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