The acceptance of policy of globalisation and liberalisation naturally leads to privatisation. It is also known as disinvestment. It means selling off public sector enterprises to private industries. In some cases the government reduces its own share in the public sector companies – e.g. Some shares of the Maruti Udyog ltd. were sold in the open market through an initial public offer (IPO). Videsh Sanchar Nigam ltd. (VSNL) was sold to the TATA group. Centaur hotels in Mumbai at Santacruz and Juhu were sold to private companies. The Ashoka group of hotels, a government owned chain of hotels in various cities in India was sold to the private sector companies. BSES (Bombay suburban electric supply) was sold to Reliance group of industries. After 1990 many public sector industries were privatised. Private sector telecom players have asked the government to privatise BSNL and MTNL, the two telecom giants in the public sector.
The disinvestment department was established in 1999 under the finance ministry. It supervises the disinvestment process in the country as a whole. Private industrialists have always asked for the privatisation of profit making public sector units. (PSU) Disinvestment releases the financial burden of the government. Funds which are released can be invested in welfare activities.
The LPG policies have proved to be beneficial for the upper class people in India. They have become richer. There are now many Indian industrialists listed by the Forbes magazine among the first hundred richest people in the world. We have many private airlines providing national and international services, FM radio stations broadcasting 24/7, Satellite television, malls, mobile phones, improved telephone services, international universities, call centres and fat salaries for the youngsters, broadband internet, E- commerce, E-trading, E-governance, full computerisation and national and international networking of banks, improved highways and three lane and four lane cement expressways, better railway services etc.
The industrial and the service sector received many concessions. There profit margins have increased. Now we have Indian multinationals. Many of these Indian multinational companies are aggressively involved in mergers and acquisitions world wide. Share markets are attracting the neo rich and the rising middle class. Investment in the share market has no longer remained a taboo for the middle class. Initial public offers are being oversubscribed heavily. (The initial public offer of Aditya Birla group company Idea Cellular in February 2007, was oversubscribed more than 57 times, generating the highest ever demand of Rs 1,21,557 crore — surpassing Rs. 1,13,850 crore registered by the Reliance Petroleum IPO last year. The Reliance Petroleum IPO was oversubscribed 52 times – Economic Times). The Rupee has gained strength against the Dollar over the past few years.
But LPG process has its darker side also. All over India suicide cases of small and landless farmers are on the rise. They are heavily indebted. Rising unemployment is another grave problem among urban youth. Government has stopped almost all new recruitment in the administration. In the private sector lay offs and salary cuts have become routine. Often the pink slip (official notice telling you that you have been fired from your job) is issued to the employees. Private jobs are becoming more and more insecure. Many workers loose their jobs at the age of 40 or 45 as a result of the company offering ‘voluntary retirement schemes‘. Welfare schemes are closed down by the government. It has also reduced its spending on the education sector. Teachers are appointed temporarily on contract basis in schools and colleges, tuition fees for schools and college have been hiked.
Property prices in urban and semi urban areas have been zooming up making it impossible for the poor and the middle class to own even a small house there. They shift to remote suburbs, where they can have houses at comparatively cheaper rates and prefer to commute daily to the central business district through a poor public transport system for jobs. We have five star hospitals catering to the needs of the rich and the foreigners who enjoy medical tourism and poor medical facilities for the rural areas.
Urban centres are experiencing unplanned development. Slums and crime are on the rise in these areas. Encroachment on forest land is another problem. It is badly affecting the environment.