Read the following passage carefully to answer these questions based on what is stated or implied there in :
Passage I :

The public sector is at the cross roads ever since the launch of economic reforms programme in India. The pendulum has been swinging between survival and surrender. It is the result of a confluence of several factors : a shift in global economic environment, the emergence of the market economy and myths surrounding the performance of the public sector. So virulent has been the onslaught that it is becoming axiomatic that by the very concept, the public sector is inefficient and resource waster whereas private enterprise is resource efficient.

The reform programme in India commenced with the policy of restricting of the public sector supported by greater public participation. With the passage of time, the process of liberalisation has shifted to privatisation in a disguised form couched asstrategic role, in the wake of the recent hot pursuit of the wholesale privatisation programme a lively ana poignant debate has emerged. It provides a golden opportunity to introspect and revisit the issue.

At the very outset, it must be made clear that in the worldwide liberalised economic environment and very high stake of the state in most public sector undertakings disinvestment policy seeks to differentiate closed or bankrupt enterprise from the private sector — a fact deliberately over looked by the champions of privatisation. These undertakings need immediate attention. They are an unnecessary drain on the public exchequer. A high priority area for the disinvestment programme ought to be these enterprises but under one or the other argument these remain unattended, may beit involves a tough task.. If these cannot be sold lock, stock and barrel asset stripping is the only option. Obviously the government cannot realise good price from these assets but their disposal will help stop the drain. If the assets are depreciated or became obsolete, then there is no point in holding on to them indefinhely and take to softer option of selling the vibrant and highly profit-making organisations to reduce the budgetary deficit. Non performers exist both in public and private sectors. Why condemn the public sector as a whole? Better option will be closure or privatisation of loss-making and non-viable units supporting PSU's which could be turned around and become healthy and viable and providing autonomyto the boards of PSU's which are performing well and have potential to be globally competitive be welcome. With public participation in the PSU's there will be a good dose of accountability in the system. What needs to be reviewed are some basic issues : the priorities allocated to the enterprises selected for disinvestment, a comprehensive road map delineating the route, the modes and modalities timing andits consequences. These basic issues require greater discussion and participative decisionmaking. In any event, the disinvestment programme in respect of the closed and non revivable units is a mustif the drain of further resourcesis to be prevented.

Let it be understood that PSU's are a big repository of value andit will take quite some time for privatisation programmeto materialise despite the desire to expedite the process. Until then if a vacuum emerges attended by uncertainty it will do a great harm to the investments which were made with such great dedication although desired now.
The government has withdrawn a budgetary support over the last decade. If some support is extendedit is largely directed to closed or losing enterprise which have no fortune.

Question 1

The basic issue(s) requiring greater discussion and participative decision making regarding the disinvestment programme is/are

Create a FREE account and get:

  • All Quant Formulas and shortcuts PDF
  • 40+ previous papers with solutions PDF
  • Top 500 MBA exam Solved Questions for Free


Boost your Prep!

Download App