The Impact of Liberalisation and Privatisation in India
Public sector undertakings across the globe are under scrutiny. Privatisation policies have been advanced and advocated as panacea for poor performance of public enterprises. Theoretical foundations for privatisation are provided by four variants of the New Right School of Thought – property rights literature, public-choice theory, principal-agent theory and literature on success stories of private corporate sector. The New Right School of Thought broadly argues that state involvement leads to increasing monopoly, increasing budget and suppressing of entrepreneurial behaviour, limiting choice, over production of unwanted services and encouragement to waste and inefficiency. The New Right thus has forcefully advocated withdrawal of the state as a regulator and as a producer. Deregulation and privatisation, therefore, are on the top of the reform agenda of the New Right.