India's Central PSEs-Origin, Size, and Growth (2003)

PSE,

governance,

bankruptcy,

employment,

Indicus Analytics,

This is a study of India's PSES: their size, industrial and geographical spread, governance, cost structure, profitability, financial distress, employment, and their future. This study explores three aspects. First, it compares the performance of PSE'S vis-à-vis their competitors in the Indian private sector with respect to various measures of profitability, capital utilization, financial structure, and costs. Second, it invokes costs that arise out of principal-agent relationships and the theory of incentives to claim that ownership matters. Third, as a consequence, it argues for a well-sequenced but rapid privatization of PSE'S, beginning with luxury hotels and extending to all tradable under the competitive threats of entry and progressively lower tariff. Indeed, it argues that the long-term corporate growth of the better-off PSE'S demands that these companies be privatized and liberated from the fetters of bureaucracy.