Effectiveness of Private Participation Through Technology and Innovation on the Performance of Central Public Sector Enterprises in India

Authors

  • Mr. Abhijit Phukon,

Abstract

n this study, an attempt has been made to analyse the individual as well as group effect
of disinvestment/ privatization on the financial and operating performance of 24 central public sector
enterprises (CPSEs) in India.
Design/methodology/approach- The study is based on “before-and-after” or “pre-and-post” design. The
change in performance is measured by comparing the difference in the variables at the before and after periods
(-5, 0, +5 years). Paired sample t-test is used as a principal method of testing the significant changes in the
variables before and after divestment/ privatization. The sample size covers 24 CPSEs which have been
divested once or more “between” 2002-03 to 2011-12. Data for each company is collected for 10 years (5
years before and 5 years after the benchmark year of disinvestment).
Findings- At individual enterprise level, significant improvement in the financial and operational performance
of 24 divested/ privatized CPSEs have been observed. However, magnitude of improvement is different based
on sectoral categorization, degree of ownership, reported profit or loss, level of autonomy, listing in the stock
exchanges, performance contract and corporate governance etc. While CPSEs operated in the Electricity and
Service sectors have shown significant improvement, CPSEs operated in the Mining and Manufacturing
sectors have shown marginal improvement. Privatized CPSEs have experienced a significant improvement in
their performance as compared to divested CPSEs

Published

2020-01-31

Issue

Section

Articles