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This article provides information about the overall impact of privatisation on Indian economy:
As a part of privatisation of Public Sector Units (PSUs) disinvestment of equity was started in December 1991 and a Disinvestment Commission was set up during 1991 -92 for identifying PSUs for equity disinvestment and for suggesting modalities of disinvestment The pace of disinvestment was not so satisfying during the first decade of reforms with realised revenues from sale of public equity being modest (roughly 35% of the target of Rs. 78,300 crores were realised in the period 1991-92 to 2002-03).
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The successful privatisation of Bharat Aluminium Company Limited (BALCO), particularly its affirmation by the Supreme Court after it was challenged, changed the climate for privatisation for the better. Although a good number of PSUs had been disinvested either by the sale of equity or through strategic sale, the political disagreements in disinvesting high profile PSUs such as Indian Airlines, Air India etc. suggest that the political economy considerations are still unfavourable to large scale disinvestment in our country.
Privatisation in infrastructure sector began with the amendment of relevant legislation to permit private enterprises to enter power generation in October 1991. But not much headway was created in this sector even after a decade and a half. Whereas reforms have been much successful in telecommunications sector. Value added services were opened to private sector in 1992, followed by the enunciation of the National Telecom Policy in 1994-95 which opened up basic telecom services to competition. Foreign equity participation up to 49% was permitted in case of a joint venture between an Indian and a foreign firm.
The Telecom Regulatory Authority of India (TRAI) was established in 1997. In order to separate the service-providing function of publicly owned telecom enterprises and policy-making function, both of which were initially with the Department of Telecommunications, a separate Department of Telecom Services was set up in 1999- 2000. The two public sector service providers were corporatised in 2000-01. International long-distance business, which was a public sector monopoly, was opened to unrestricted entry in 2002-03.
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The Universal Service Support Policy came into effect in April 1, 2002, under which a universal service levy (USL) at 5% of adjusted gross revenue of all telecom carriers (except pure value added service providers) has been fixed. The Universal Service Fund, financed by the levy, will subsidies access to public and community phones in villages as well as individual household phones in net high cost rural/remote areas. The two basic goals of reforms are: delivering low-cost voice telephony to the largest possible number of individuals, and delivering low-cost high-speed computer networking to the largest number of firms.
Roads sector is another field of in infrastructure reforms. A key reform was the creation of a major new source of funding for national, state and rural road construction, called the Central Road Fund (CRF) under the Central Road Fund Act of2000. The National Highway Development Project financed by the CRF is one of the largest single highway projects in the world. It includes the nearly 6,000 km of Golden Quadrilateral (GQ) connecting the four metropolitan cities of Chennai, Delhi, Kolkata and Mumbai and 7,300 km of North-South and East-West Corridor.
Indian Railways (IR) has undertaken several reforms to improve their functioning. The government has approved restructuring of four metro airports (Chennai, Delhi, Kolkata and Mumbai) to make them world class and approval in principle has been granted for setting up new international airports in Bangalore, Hyderabad and Goa with private sector participation.