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Partial Divestiture and Performance of Indian Public Sector Enterprises
Economic and Political Weekly
Vol. 38, No. 29 (Jul. 19-25, 2003), pp. 3088-3093
Published by: Economic and Political Weekly
Stable URL: http://www.jstor.org/stable/4413811
Page Count: 6
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Global empirical studies of privatised firms show a significant improvement in their performance after privatisation. This is true in case of fully as well as partly privatised firms. What is the evidence for Indian divested enterprises in this regard? This paper attempts an analysis by empirically examining the impact of divestiture. The results indicate that in case of partial divestiture, where divested equity is thinly spread with the majority shareholding still with the government, there has been no improvement in terms of profitability and operational efficiency. The paper therefore endorses the government's current policy of strategic sale, where management control passes to the strategic partner.
Economic and Political Weekly © 2003 Economic and Political Weekly