Bolder Disinvestment or Better Performance Contracts? Which Way Forward for India’s State-Owned Enterprises

Ajay Chhibber and Swati Gupta

Working Papers from eSocialSciences

Abstract: This paper analyses the performance of India’s Public Sector Undertakings (PSUs) using measures of labour and overall efficiency and productivity indicators as opposed to financial returns. Using methods that correct for selection bias, the results show that performance contracts do not improve firm efficiency but disinvestment has a very strong positive effect on firm efficiency. Disinvestment improves labour productivity and efficiency, which is not surprising, but it also improves overall efficiency. India should pursue much bolder privatization even of PSUs which claim to be making operational profits – such as Air India, because privatization improves overall firm efficiency and unlocks capital for use elsewhere, especially in public infrastructure, and reduces the possibility of political interference in their functioning in future.

Keywords: Public Sector Undertakings; State Owned Enterprises; Public Sector Restructuring; MOU (performance contract); Disinvestment ( privatization); public infrastructure; political interference; capital; bolder privatization; labour productivity; India. (search for similar items in EconPapers)
Date: 2017-10
Note: Institutional Papers
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.esocialsciences.org/Download/repecDownl ... AId=12127&fref=repec

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ess:wpaper:id:12127

Access Statistics for this paper

More papers in Working Papers from eSocialSciences
Bibliographic data for series maintained by Padma Prakash ().