'The Public Sector and Privatization in India' review: A ringside view of how politics, philosophy, trends determine economic trajectory

Things do have a habit of coming full circle. Indian polity’s morbid fascination with the public sector, especially post Independence, is a case in point. Did you know that first prime minister Jawaharlal Nehru actually envisaged that the public sector will grow “both absolutely and relatively, and the whole economy of the country will be controlled by it?”

And juicy this one, the first industries minister who laid down this very idea into law with the first industrial policy in 1948 was none other Dr. Syama Prasad Mukherjee, who is today up there in the pantheon of demi-gods of the present ruling dispensation who holds a diametrically opposing view?

The very one whose spate of Atmanirbhar Bharat restructuring of the economy post-Covid had that gem of a policy break in 2021 called the ‘Strategic Disinvestment Policy 2021’, which brazenly declared that the government will get out of running businesses (essentially public sector units) in all sectors except “bare minimum public sector units in strategic as well as non-strategic sectors’.

The U-turn in itself a study in contrasts, contradictions and calumny that history wreaks, when staunchly- held beliefs of what is right and ideal in one era falter at the altar of the test of time. And that is the detailed, and often delightful, journey that economist Sheela Dubey takes us on in her latest book ‘The Public Sector and Privatization in India’.

An expert who has taught at Delhi University, Dubey’s piece is interesting for its simple, precise and mighty readable approach to how public sector policy got shaped over the past 75 years of independent India, and the various, trends, philosophies, dogmas – and politics, that influenced it.

The book pitches a comparative study in how the philosophy of government control of the economy waxed and waned through the tenure of the many prime ministers, and how the politics of the day shaped the measures and reforms they initiated. Indira Gandhi, for example, went in for a massive spate of nationalisations and expansion of PSU during her initial years, but during her last stint as PM in the 1980s, devoid of having to depend on the crutches of CPI (and the USSR) for majority support, she was apparently giving second thoughts on the road she took. Two months before she was shot dead, Gandhi had set up a high-level committee to evaluate the public sector.

Dubey also highlights the influence of politics on how public sector expansion, or for that matter, the divestment from the sector that has been the zeitgeist ever since the 1991 liberalisation, had good days and bad days over several regimes, and why it has been on the backburner for years now, despite a pro-capital, pro-enterprise government at the helm. In particular, despite the Strategic Disinvestment Policy setting in stone India’s intention to supposedly relegate public sector to the history books (or books like this one), the only privatisation success has been Air India and Neelachal Ispat (Interestingly, both were sold to the Tatas).

Dubey’s book focuses on the evolution of the public sector in India, but in reality, it is ringside view of how politics, philosophy and prevailing trends determine the economic trajectory of a country. And not always for the good.

The Public Sector and Privatization in India
Author: Sheela Dubey
Published by: Speaking Tiger
Pages: 271; Price Rs 695 (hardbound)