The Rangarajan Committee on Disinvestment (1993)

The Rangarajan Committee of 1993 was constituted by the government for making recommendations in context with the disinvestment. The committee said that:

  • The units to be disinvested should be identified and disinvestment could be made up to any level, except in defence and atomic energy where the government should retain the majority holding in equity.
  • Disinvestment should be a transparent process duly protecting the right of the workers.
  • An autonomous body for the smooth functioning and monitoring of the disinvestment programme should be established.

Arguments on Disinvestment

For

  • Trade unionism and political and political interference often lead to halting of PSUs projects thereby hampering the efficiency in long run.
  • Private ownership does not guarantee the efficiency (Rangarajan Committee 1993.)
  • It will lead to monopoly and oligopolistic practices by corporate.

Against

  • It is against the sociologist ideology of equal distribution of resources amongst the population.
  • Private players work out-of Red-tapism bureaucratic mentality and focus on performance-driven culture and effectiveness (Disinvestment Commission 1996).
  • Problem of disguised unemployment and out-dated skill in PSUs employee are the major cause of inefficiency.

Conclusion

Disinvestment assumes significance due to the prevalence of an increasingly competitive environment, which makes it difficult for many PSUs to operate profitably. This leads to a rapid erosion of value of the public assets making it critical to disinvest early to realize a high value.

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