India Abandons Privatization Plans, Invests in State-Run Enterprises

Politics Politics of India

Posted by NewAdmin on 2025-01-29 09:28:23 |

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The Indian government, under Prime Minister Narendra Modi, has shifted its economic strategy by halting extensive privatization efforts and committing substantial investments to revitalize state-owned enterprises. Notably, a $1.5 billion rescue package has been allocated to support two public sector companies, including helicopter operator Pawan Hans. Plans to privatize at least nine additional state-owned units have been paused due to opposition from various ministries. Despite initial ambitions to privatize numerous state-run enterprises in 2021, the government has completed only three significant sales, including that of Air India. This policy shift is influenced by expectations that restructured entities could return to profitability and generate dividend income. Political considerations, such as resistance from employee unions and the need to maintain alliances with regional partners, have also played a role. Consequently, New Delhi is anticipated to miss its divestment targets for the sixth consecutive year, with fiscal priorities now focusing less on privatization as a means to bridge budget deficits.

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