Issue of Privatisation in India

You must understand that the New Industrial Policy declared by the government in July 1991 emphasised upon the following four major steps to reform the public sector enterprise:

1. Decrease in the number of industries reserved for the public sector from 17 to 8 (further decreased to 4 and then to 2) and the launch of selective competition in the reserved area.

2. The disinvestment of shares of a select set of public sector enterprises.

3. The policy towards sick public sector enterprises to be the same as that for private sector.

4. An improvement of performance through an MOU system.

De-reservations: The 1991 industrial policy decreased the number of industries reserved for the public sector to 4 from 17. The reserved sectors are:

1. Arms and ammunition and allied items of defence equipment, combat aircraft and warships.

2. Atomic Energy.

3. Minerals specified in the schedule to the Atomic Energy Order, 1953.

4. Railway Transport.

Presently, only Railways and Atomic Energy are reserved areas.

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