12 FEB,2022 | MEDC
The government decision to deemphasize privatization reflects the fact that botching the sale of key public assets can prove costly in both political and economic terms. Air India was successfully privatized; but replicating that level of attention to detail to numerous other PSUs may not be possible in the near future. Executing privatization correctly is a major valuation issue that even advanced economies have not yet perfected. Policymakers should think twice before turning privatization into a benchmark of overall economic performance and inclusive growth. There are times when a policy retreat is a welcome embrace of economic pragmatism; and this is one of them. This is not to say that privatization should never be considered; but only that its timing is critically important. Failure on the privatization front tends to overshadow all other reforms and initiatives of the government; and the state cannot afford it at this juncture. The topmost policy focus today has to be on macroeconomic stabilization. The government is now hard-pressed for resources; but a mindless sale of the family silver is not the way to generate them.
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