This important book tackles some of the main security challenges facing the international develop... more This important book tackles some of the main security challenges facing the international development community today. Containing contributions by leading experts, including some who have been at the centre of the international policy debate, it goes further by putting forward suggestions and recommendations as to how best deal with these threats as well as challenges in this crucial area.
India has a long and checkered history of planning with some success but many failures. Despite I... more India has a long and checkered history of planning with some success but many failures. Despite India's federal structure India's approach to planning has been top-down with the union government controlling many levers-financial and otherwise to determine the direction of the economy and social programs. India has tried 3 types of planning-"directed planning", "indicative planning" and now just a "strategy but no planning". India needed to replace the Planning Commission but not give up on planning altogether. Just as the rest of the world was going back to a "new planning" surge to handle climate change and the desire to meet the SDGs, India abolished planning altogether. The successor to the planning commission-the Niti Aayog needs to get back to "new planning", that is now being adopted by many countries with stronger leadership. A legitimised authorising environment and effective use to plan can help India achieve the SDGs by 2030 and become a prosperous country by 2047.
Around the globe, the state is in the spotlight. Far-reaching developments in the global economy ... more Around the globe, the state is in the spotlight. Far-reaching developments in the global economy have us revisiting basic questions about government: what its role should be, what it can and cannot do, and how best to do it.
The Sustainable Development Goals-SDGs with 17 goals and 169 targets were adopted by world leader... more The Sustainable Development Goals-SDGs with 17 goals and 169 targets were adopted by world leaders in September, 2015. This paper argues that if the world had problems monitoring the MDGs-with 8 goals and 21 targets, it will find it impossible to track the SDGs. It recommends focusing on 60 highest priority targets. It also highlights the synergies and trade-offs among the various goals-especially between growth, inequality and sustainability which countries and the world will have to navigate. The Addis Ababa Action Agenda (AAAA), ostensibly, the financing plan for the SDGs widens the scope of development financing to include private and domestic financing-moving from billions to trillions. But such an approach also dilutes global responsibility for development and climate financing. The paper suggests an evaluation framework for assessing the AAAA and ensuring that the synergies among the SDGs are exploited and the trade-offs confronted. The paper suggests a pathways approach with concurrent evaluation every five years to assess and adjust programmes and policies.
... The Economic Analysis and Projections Department, under the direction of Jean Baneth, support... more ... The Economic Analysis and Projections Department, under the direction of Jean Baneth, supported the work on Part I, and Enzo Grilli, Peter ... High-income oil exporters (not included in devel-oping countries) comprise Bahrain, Brunei, Ku-wait, Libya, Oman, Qatar, Saudi Arabia ...
This paper analyzes the performance of India's 235 public sector undertakings (PSUs)-India's soci... more This paper analyzes the performance of India's 235 public sector undertakings (PSUs)-India's socialistic legacy from the Nehru-Gandhi days. Of these 7 largest PSUs are called Maha Ratna's, 17 are called Navratnas and some 73 are given the title of Mini Ratna's. The economic reforms of 1991, dismantled the "license-raj" but left the PSUs intact. Attempts were made to try and improve their performance through performance contracts called Memorandum of Understandings (MOU's) with some success but with still a large number of loss makers. A brief but highly successful attempt was made under the NDA 1 government from 1999-2004 to begin dismantling this legacy but met with considerable opposition from vested interests and labor unions. Subsequent UPA government's tried to further improve the performance of these companies through better performance contracts and bringing more PSUs into the Ratna classification. Under UPA 2 more aggressive disinvestment (partial privatization)) was also pursued to raise more revenue and hopefully improve firm performance. Using firm level data over the period 1990-2015 from the Public Enterprise Survey now collated in the Capitaline Data Base this paper looks into factors that explain the performance of these PSUs. The results show that MOU's have had a positive impact on PSU performance by increasing their return on capital (ROC) by almost 8-9 percentage points. This result holds mainly for the nonservice sector (manufacturing, mining) but less so for service sector firms. In the case of service sector firms, partial privatization (share sales) has a significant impact on performance, making them ideal candidates for more aggressive disinvestment. Strategic disinvestment (privatization) gives much better results with a tripling of the ROC post privatization. The results also show that larger PSUs-Maharatnas appear to perform better than smaller PSUs and even better than private firms of similar size. But smaller PSU-Navratnas and MiniRatnas perform worse than private companies and should be good candidates for strategic disinvestment (privatization). PSUs that do not have Ratna status-and are loss makers should be disposed of for their real estate and scrap value. The paper concludes that India should raise capital through strategic disinvestment (privatization), disinvestment and liquidation of up to $ 250 billion which can be reinvested in public infrastructure through the National Infrastructure Investment Fund and not into the budget as a revenue raising measure.
This paper lays out a two-part strategy to improve the effectiveness of the state in India reduce... more This paper lays out a two-part strategy to improve the effectiveness of the state in India reduce the scope of the state and then improve its capability. It argues that the state tries to do too many things and ends up doing many of them badly. It must reduce its scope and change the way it does thingsreduce their complexity. It must also strengthen the capabilities of the state institutionsespecially those dealing with administrative functions and rule of law. The state must also build up the capability of local administration and increase its financing. It must also get out of the business of business by privatizing state-owned enterprises.
The opinions expressed in this Study do not necessarily reflect the views of the United Nations D... more The opinions expressed in this Study do not necessarily reflect the views of the United Nations Development Programme, its Executive Board or its Member States. The study is an independent publication commissioned by UNDP. The sharing of this Study with the external audience is aimed at generating constructive debate and does not constitute an endorsement by UNDP or institutions of the United Nations System.
Countries undergoing adjustment have increasingly found it difficult to sustain cuts in public se... more Countries undergoing adjustment have increasingly found it difficult to sustain cuts in public sector deficits to match cuts in external financing, thus exacerbating inflation and financial disequilibrium. Moreover, fiscal contraction has often been short-term oriented. Fundamental fiscal reform involving a medium-term perspective has been rare. Given the central importance of fiscal issues in adjustment programs, however, greater focus on them is essential if such programs aze to. succeed. The Pblicy, Planning. and Research Complex distributes PPR Woiking Papers to disseminate the findings of wock in progess and to aicourage the exchange of ideas ainang Bank staff and all others interested in development issues. These papess carry the names of the authors, reflect only hicr views, and should be used and cited accordingly 'ne findings, interpretations, and concdsions are the authors own. lEey should not be atributed to theWorld Bank, its Board of Dirctors, itumanagasent, or any...
This paper analyses the performance of India’s Public Sector Undertakings (PSU’s) using measu... more This paper analyses the performance of India’s Public Sector Undertakings (PSU’s) using measures of labor and overall efficiency and productivity indicators as opposed to financial returns. Using methods that correct for selection bias the results show that performance contracts do not improve firm efficiency but disinvestment has a very strong positive effect on firm efficiency. Disinvestment improves labor productivity and efficiency, which is not surprising, but it also improves overall efficiency. India should pursue much bolder privatization even of PSU’s which claim to be making operational profits – such as Air India - as privatization improves overall firm efficiency and unlocks capital for use elsewhere – especially in public infrastructure and reduces the possibility of political interference in their functioning in future.
Private investment has slumped in India and its revival is vital for accelerating India's gro... more Private investment has slumped in India and its revival is vital for accelerating India's growth rate on a sustained basis. This paper analyzes the determinants of aggregate private investment and its components corporate and non-corporate private investment for the period 1980-81 to 2013-14. This paper finds that the key determinants of private investment are the size of the public sector capital stock, the real effective exchange rate, the output gap and the availability of credit to the private sector. So, higher public investment would crowd-in more private investment. When we break it down further private corporate investment is significantly explained by the real exchange rate and the availability of credit to the private sector whereas for non-corporate investment public capital stock is the most significant variable- as it crowds in private investment. Real interest rate has no significant effects on investment. Simulations show that if India increases public investment ...
Journal of Infrastructure, Policy and Development, 2021
India entered its so-called demographic dividend around 2005—expected to last until 2055. India h... more India entered its so-called demographic dividend around 2005—expected to last until 2055. India has already utilized almost a third of the period of its demographic dividend—it saw a period of explosive growth from 2003–2012—but has not been able to sustain that growth. And since 2012, growth has generated less and less employment, as it has turned inward, and so it is not helping the working-age population get usefully employed. The labor force participation rate for women has been low and is now falling. What can be done to use India’s underlying factors of production better to generate greater, more inclusive, and sustained prosperity for its citizens? These second-generation reforms are not easy, as they need cooperative federalism and much broader consensus, but without them India’s demographic dividend may become a disaster.
International Journal of Public Sector Management, 2018
Purpose While national public policies such as performance contracts and disinvestment affect the... more Purpose While national public policies such as performance contracts and disinvestment affect the dynamics of large- and medium-scale state-owned enterprises in emerging market economies, the purpose of this paper is to analyze the performance of India’s public sector undertakings (PSUs) and suggest options to improve their outcomes. Design/methodology/approach Using firm-level data on India’s 235 PSUs with total assets of around $500 billion over the past two and half decades (1990-2015), the study empirically tests the effect of performance contracts, measured by memorandum of understanding (MOU) and disinvestment, measured by private equity share, on PSUs performance indicator such as return on capital (ROC). Data were collected from the Public Enterprises Survey Reports released by the Department of Public Enterprises under India’s Ministry of Heavy Industries and Public Enterprises, Department of Disinvestment, Bombay Stock Exchange and Capitaline database. By controlling firm-...
This paper analyses the performance of India's Public Sector Undertakings (PSUs) using measures o... more This paper analyses the performance of India's Public Sector Undertakings (PSUs) using measures of labour and overall efficiency and productivity indicators as opposed to financial returns. Using methods that correct for selection bias, the results show that performance contracts do not improve firm efficiency, but disinvestment has a very strong positive effect on firm efficiency. Disinvestment improves labour productivity and efficiency, which is not surprising, but it also improves overall efficiency. India should pursue much bolder privatization even of PSUs which claim to be making operational profits-such as Air India, because privatization improves overall firm efficiency and unlocks capital for use elsewhere, especially in public infrastructure, and reduces the possibility of political interference in their functioning in the future.
This important book tackles some of the main security challenges facing the international develop... more This important book tackles some of the main security challenges facing the international development community today. Containing contributions by leading experts, including some who have been at the centre of the international policy debate, it goes further by putting forward suggestions and recommendations as to how best deal with these threats as well as challenges in this crucial area.
India has a long and checkered history of planning with some success but many failures. Despite I... more India has a long and checkered history of planning with some success but many failures. Despite India's federal structure India's approach to planning has been top-down with the union government controlling many levers-financial and otherwise to determine the direction of the economy and social programs. India has tried 3 types of planning-"directed planning", "indicative planning" and now just a "strategy but no planning". India needed to replace the Planning Commission but not give up on planning altogether. Just as the rest of the world was going back to a "new planning" surge to handle climate change and the desire to meet the SDGs, India abolished planning altogether. The successor to the planning commission-the Niti Aayog needs to get back to "new planning", that is now being adopted by many countries with stronger leadership. A legitimised authorising environment and effective use to plan can help India achieve the SDGs by 2030 and become a prosperous country by 2047.
Around the globe, the state is in the spotlight. Far-reaching developments in the global economy ... more Around the globe, the state is in the spotlight. Far-reaching developments in the global economy have us revisiting basic questions about government: what its role should be, what it can and cannot do, and how best to do it.
The Sustainable Development Goals-SDGs with 17 goals and 169 targets were adopted by world leader... more The Sustainable Development Goals-SDGs with 17 goals and 169 targets were adopted by world leaders in September, 2015. This paper argues that if the world had problems monitoring the MDGs-with 8 goals and 21 targets, it will find it impossible to track the SDGs. It recommends focusing on 60 highest priority targets. It also highlights the synergies and trade-offs among the various goals-especially between growth, inequality and sustainability which countries and the world will have to navigate. The Addis Ababa Action Agenda (AAAA), ostensibly, the financing plan for the SDGs widens the scope of development financing to include private and domestic financing-moving from billions to trillions. But such an approach also dilutes global responsibility for development and climate financing. The paper suggests an evaluation framework for assessing the AAAA and ensuring that the synergies among the SDGs are exploited and the trade-offs confronted. The paper suggests a pathways approach with concurrent evaluation every five years to assess and adjust programmes and policies.
... The Economic Analysis and Projections Department, under the direction of Jean Baneth, support... more ... The Economic Analysis and Projections Department, under the direction of Jean Baneth, supported the work on Part I, and Enzo Grilli, Peter ... High-income oil exporters (not included in devel-oping countries) comprise Bahrain, Brunei, Ku-wait, Libya, Oman, Qatar, Saudi Arabia ...
This paper analyzes the performance of India's 235 public sector undertakings (PSUs)-India's soci... more This paper analyzes the performance of India's 235 public sector undertakings (PSUs)-India's socialistic legacy from the Nehru-Gandhi days. Of these 7 largest PSUs are called Maha Ratna's, 17 are called Navratnas and some 73 are given the title of Mini Ratna's. The economic reforms of 1991, dismantled the "license-raj" but left the PSUs intact. Attempts were made to try and improve their performance through performance contracts called Memorandum of Understandings (MOU's) with some success but with still a large number of loss makers. A brief but highly successful attempt was made under the NDA 1 government from 1999-2004 to begin dismantling this legacy but met with considerable opposition from vested interests and labor unions. Subsequent UPA government's tried to further improve the performance of these companies through better performance contracts and bringing more PSUs into the Ratna classification. Under UPA 2 more aggressive disinvestment (partial privatization)) was also pursued to raise more revenue and hopefully improve firm performance. Using firm level data over the period 1990-2015 from the Public Enterprise Survey now collated in the Capitaline Data Base this paper looks into factors that explain the performance of these PSUs. The results show that MOU's have had a positive impact on PSU performance by increasing their return on capital (ROC) by almost 8-9 percentage points. This result holds mainly for the nonservice sector (manufacturing, mining) but less so for service sector firms. In the case of service sector firms, partial privatization (share sales) has a significant impact on performance, making them ideal candidates for more aggressive disinvestment. Strategic disinvestment (privatization) gives much better results with a tripling of the ROC post privatization. The results also show that larger PSUs-Maharatnas appear to perform better than smaller PSUs and even better than private firms of similar size. But smaller PSU-Navratnas and MiniRatnas perform worse than private companies and should be good candidates for strategic disinvestment (privatization). PSUs that do not have Ratna status-and are loss makers should be disposed of for their real estate and scrap value. The paper concludes that India should raise capital through strategic disinvestment (privatization), disinvestment and liquidation of up to $ 250 billion which can be reinvested in public infrastructure through the National Infrastructure Investment Fund and not into the budget as a revenue raising measure.
This paper lays out a two-part strategy to improve the effectiveness of the state in India reduce... more This paper lays out a two-part strategy to improve the effectiveness of the state in India reduce the scope of the state and then improve its capability. It argues that the state tries to do too many things and ends up doing many of them badly. It must reduce its scope and change the way it does thingsreduce their complexity. It must also strengthen the capabilities of the state institutionsespecially those dealing with administrative functions and rule of law. The state must also build up the capability of local administration and increase its financing. It must also get out of the business of business by privatizing state-owned enterprises.
The opinions expressed in this Study do not necessarily reflect the views of the United Nations D... more The opinions expressed in this Study do not necessarily reflect the views of the United Nations Development Programme, its Executive Board or its Member States. The study is an independent publication commissioned by UNDP. The sharing of this Study with the external audience is aimed at generating constructive debate and does not constitute an endorsement by UNDP or institutions of the United Nations System.
Countries undergoing adjustment have increasingly found it difficult to sustain cuts in public se... more Countries undergoing adjustment have increasingly found it difficult to sustain cuts in public sector deficits to match cuts in external financing, thus exacerbating inflation and financial disequilibrium. Moreover, fiscal contraction has often been short-term oriented. Fundamental fiscal reform involving a medium-term perspective has been rare. Given the central importance of fiscal issues in adjustment programs, however, greater focus on them is essential if such programs aze to. succeed. The Pblicy, Planning. and Research Complex distributes PPR Woiking Papers to disseminate the findings of wock in progess and to aicourage the exchange of ideas ainang Bank staff and all others interested in development issues. These papess carry the names of the authors, reflect only hicr views, and should be used and cited accordingly 'ne findings, interpretations, and concdsions are the authors own. lEey should not be atributed to theWorld Bank, its Board of Dirctors, itumanagasent, or any...
This paper analyses the performance of India’s Public Sector Undertakings (PSU’s) using measu... more This paper analyses the performance of India’s Public Sector Undertakings (PSU’s) using measures of labor and overall efficiency and productivity indicators as opposed to financial returns. Using methods that correct for selection bias the results show that performance contracts do not improve firm efficiency but disinvestment has a very strong positive effect on firm efficiency. Disinvestment improves labor productivity and efficiency, which is not surprising, but it also improves overall efficiency. India should pursue much bolder privatization even of PSU’s which claim to be making operational profits – such as Air India - as privatization improves overall firm efficiency and unlocks capital for use elsewhere – especially in public infrastructure and reduces the possibility of political interference in their functioning in future.
Private investment has slumped in India and its revival is vital for accelerating India's gro... more Private investment has slumped in India and its revival is vital for accelerating India's growth rate on a sustained basis. This paper analyzes the determinants of aggregate private investment and its components corporate and non-corporate private investment for the period 1980-81 to 2013-14. This paper finds that the key determinants of private investment are the size of the public sector capital stock, the real effective exchange rate, the output gap and the availability of credit to the private sector. So, higher public investment would crowd-in more private investment. When we break it down further private corporate investment is significantly explained by the real exchange rate and the availability of credit to the private sector whereas for non-corporate investment public capital stock is the most significant variable- as it crowds in private investment. Real interest rate has no significant effects on investment. Simulations show that if India increases public investment ...
Journal of Infrastructure, Policy and Development, 2021
India entered its so-called demographic dividend around 2005—expected to last until 2055. India h... more India entered its so-called demographic dividend around 2005—expected to last until 2055. India has already utilized almost a third of the period of its demographic dividend—it saw a period of explosive growth from 2003–2012—but has not been able to sustain that growth. And since 2012, growth has generated less and less employment, as it has turned inward, and so it is not helping the working-age population get usefully employed. The labor force participation rate for women has been low and is now falling. What can be done to use India’s underlying factors of production better to generate greater, more inclusive, and sustained prosperity for its citizens? These second-generation reforms are not easy, as they need cooperative federalism and much broader consensus, but without them India’s demographic dividend may become a disaster.
International Journal of Public Sector Management, 2018
Purpose While national public policies such as performance contracts and disinvestment affect the... more Purpose While national public policies such as performance contracts and disinvestment affect the dynamics of large- and medium-scale state-owned enterprises in emerging market economies, the purpose of this paper is to analyze the performance of India’s public sector undertakings (PSUs) and suggest options to improve their outcomes. Design/methodology/approach Using firm-level data on India’s 235 PSUs with total assets of around $500 billion over the past two and half decades (1990-2015), the study empirically tests the effect of performance contracts, measured by memorandum of understanding (MOU) and disinvestment, measured by private equity share, on PSUs performance indicator such as return on capital (ROC). Data were collected from the Public Enterprises Survey Reports released by the Department of Public Enterprises under India’s Ministry of Heavy Industries and Public Enterprises, Department of Disinvestment, Bombay Stock Exchange and Capitaline database. By controlling firm-...
This paper analyses the performance of India's Public Sector Undertakings (PSUs) using measures o... more This paper analyses the performance of India's Public Sector Undertakings (PSUs) using measures of labour and overall efficiency and productivity indicators as opposed to financial returns. Using methods that correct for selection bias, the results show that performance contracts do not improve firm efficiency, but disinvestment has a very strong positive effect on firm efficiency. Disinvestment improves labour productivity and efficiency, which is not surprising, but it also improves overall efficiency. India should pursue much bolder privatization even of PSUs which claim to be making operational profits-such as Air India, because privatization improves overall firm efficiency and unlocks capital for use elsewhere, especially in public infrastructure, and reduces the possibility of political interference in their functioning in the future.
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