Tread warily on privatisation

The government’s privatisation drive seems poised to move into higher gear. It is pushing ahead with the sell-off of Air India. It has also announced strategic sales — or the sale of a controlling equity stake — in five public sector units (PSUs) including profitable companies such as Concor and Bharat Petroleum Corporation Limited (BPCL). 

The reforms brigade is cheering wildly. The government must be careful not to get carried away by the applause. Privatisation that is not carefully designed does little to help the economy — and it can be politically costly.

Take the case of Air India. There