As the Economy Deteriorates, GOI Moves to sell Government Enterprises

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The incumbent central government came to power promising to create a new history of development in India. However, one can imagine their plight by the fact that the government is now trying to sell its various companies to private corporations to overcome the economic downturn.


Till now, there were discussions about the sale of Air India and Bharat Petroleum Corporation Limited. But according to the latest information, the government will be selling over 26 companies to private enterprises. The list includes Pawan Hans Ltd, Bridge and Roof Co India Ltd, Cement Corporation of India Ltd, Salem Steel Plant and other major companies.


It is noteworthy that Finance minister of India Nirmala Sitharaman recently announced that 23 companies are to be handed over to private hands. However, the report revealed that 26 companies would be converted into private companies.


The government is rationalizing this decision with capital investment. Even if they say that this will bring investment, the fact remains that when someone sells their company to someone else, then that investment is to prevent bankruptcy. Blame the covid-19 pandemic or call it mismanagement, but the fact is that the government has failed to balance the country’s economy.


Former RBI governor Raghuram Rajan and former PM Manmohan Singh have repeatedly tried to guide the government in the right direction with their suggestions. But the government is not ready to listen to anyone. Economies of other countries are also struggling. But those governments are still not selling their companies.

To attract capital investment, a favourable environment has to be created in the country. Foreign investment happens only when people feel that their money will be safe. However, the central government has given a new definition of capital investment. According to the capital investment is the money raised by selling your company.


Some level of private partnership in an enterprise is still acceptable as it is an attempt to make the company successful. But handing over Government Company to private firms is equal to giving up. Such negotiation is nothing more than a question mark on the central government’s competence.

Money raised in this way might help the following economy in the short run. But it will give a wrong message to the people about the efficiency of the government. In a report, the United Nations has warned about the problems that will arise due to corona in future. According to the report, poverty and hunger will increase in weaker economies.


Such reports only suggest that the future is not very good for India that is second only to China in terms of population. Perhaps, that is the reason why the government is trying to raise the capital by selling the struggling companies to private investors. The decision has been taken considering the urgency of the situation. Nonetheless, the case highlights the inefficiency in the management of government companies and other institutions.


If these private hands can make these companies successful, then the government could have done it too. Why it could not do it is a question one must ask.

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