Is India Ready For Huge Privatization?

The most striking feature of the recently announced Union Budget2021-22 is that, India is moving towards #privatization in a big way. Except in 4 core sectors, all other PSUs will be either privatized or closed. In other areas also huge privatization is being planned.

In this brief article, we will discuss this huge paradigm shift from the policy point of view.

This privatization announcement is not merely an economic policy issue, it is going to touch almost all the aspects of our lives. World view of a common Indian citizen will be drastically different in the coming 20 years.

Privatization has pros and cons. More so for the developing countries. A few commentators are comparing it with the Thatcher-Regan led privatizations in UK and USA respectively. We beg to differ with them. Overall condition of India is very different from the UK and USA on so many levels.

Nevertheless, we understand, privatization is inevitable. In principle, we accept that. But our concern is about the way it should be implemented. Below are our few suggestions:

1. Privatization is a mindset issue and this mindset must be inculcated from the primary school levels. Students must be taught about stories about entrepreneurs. Vocational institutes after class 10 must be increased. Even in non professional courses, e.g. B.A,, B.Sc. also vocational training must be made compulsory. Entrepreneurship must be a compulsory paper in all the graduate and post graduate courses. This will help in increasing the employability and entrepreneurial skills of students.
2. Privatization may lead to monopolies and to avoid this, small entrepreneurs must be encouraged. One example. Instead of giving catering contract of a train running from Bangalore to New Delhi, to one big company, the contract can be divided and be offered to 5 smaller companies, who will cater for the range of 400 KMs.
3. Ease of doing business must be increased to attract more and more young entrepreneurs. Government agencies must act as a Facilitator, instead of Inspector.
4. Prices of services and products may go beyond the capacity of common man. To control this, regulatory authorities must be appointed.
5. Once full-blown privatization starts, swadeshi can not come in-between. It will be a global playing field and only the best will thrive. Hence only the world-class quality products and services will be expected from the private players.
6. India must start developing products and services which it can export to other countries. How many Indian companies are in the league of GE, Boeing, BMW, Seiko, IBM or Microsoft? This will be the most challenging task. Innovation and R&D will be required. Not "Make in India" but "Made In India" should be the winning mantra. If after privatization, India can not have such big companies to say her own, privatization will give us, mere big Contractors, marauding as corporates.
7. India must identify the core areas of strengths for her products and services and become world leader in those specific fields.
8. We have seen huge corruption in the corporates in the name of NPAs. Stringent laws must be brought-in to nip in the bud the corrupt practices and legal reforms must be undertaken to infuse confidence in the honest entrepreneurs and common man. Related issue is of law and order. Private entities want peaceful, diversified, vibrant and open environment to flourish. It should be guaranteed.
9. Aspirations of common man will rise. Urbanization will increase. Consumption will increase. Family and social structures will change. More women will join the work-force. There will be tectonic cultural upheavals. All these have to be factored-in and proper measures must be taken to support the changes.
10. India is choosing a new path and must prepare herself properly for a glorious journey for her 132 crores children. We suggest that comprehensive, holistic and coherent plans must be chalked out for this new journey.

In summary, let us plan properly!

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Pramod Kumar Srivastava is Founder-CEO of PKS Management Consultants, a generalist business advisory, audit and outsourcing company based at Bangalore, India. Views are personal.