Privatisation is a success story worldwide: Peter Young

BHUBANESWAR: Privatisation is the answer to many a problem besetting the industry worldwide, says Peter Young, Director of UK based Adam Smith Institute.
Young, a driving force behind privatisation moves in several countries, told a select gathering of bureaucrats, entrepreneurs and politicians here last night that privatisation increases profitability, productivity, operating efficiency, service quality and investment.
Referring to the opposition to privatisation moves in India, he said privatisation moves world over had been a success because of several reasons including correct alignment of incentives, access to capital, freedom from political interference and increased competition.
Citing the example of the public sector Orissa Mining Corporation''s chrome plant which was privatised in the early 1990''s, he said that the capacity utilisation of the plant had increased from 75 per cent to 120 per cent while the average monthly salary of employees had gone up from Rs. 2,600 to Rs. 9,800 since the plant was sold.
As per commercial results, the plant which suffered a loss of Rs. 56 lakh before privatisation, was increasing its profits now, Young said.
The gathering was jointly organised by the eastern chapter of the Confederation of Indian Industry and department of public enterprises in the Orissa government.
Arguing that there was no alternative to privatisation as regards the public enterprises, Young said the endemic poor performance of the public enterprises in India had become unsustainable while they had turned into vehicles of corruption.
The reality was that no state funds were available for investment, he said adding that the financial burden of the PES threatened the economic stability of Indian states.
In case of Orissa, public enterprises cost Rs. 8,000 crore which included equity of Rs. 1,700 crore, loans of Rs. 3,200 crore and guarantees of Rs. 3,000 crore against which the PES had raised loans from other sources.
Young, who advised several countries and institutions on privatisation, listed the impediments in the path of privatisation as weak institutions, policy confusion, hesitancy leading to a low profile and closed doors approach and mishandling of valuations.He said there could be no privatisation without political will. Citing examples of weak institutions, Young said that it included those organisations without the power to implement and exemplified a convoluted structure with too many bodies involved.