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Privatisation Not Panacea for All Ills, Says Former RBI Deputy Governor S S Mundra

Former RBI Deputy Governor S S Mundra.

Former RBI Deputy Governor S S Mundra.

A more effective result can be produced if a public sector character is retained and operational freedom and ownership are separated, he said.

Fomer RBI deputy governor S S Mundra Friday said that privatisation is not a panacea for all the ills and this myth has long been busted. A more effective result can be produced if a public sector character is retained and operational freedom and ownership are separated, he said. Speaking at a webinar organised by Bengal Chamber, Mundra said that the idea that ownership changes the behaviour of an entities are not proper.

"Privatisation is not the panacea for all ills. The myth is that ownership changes the behaviour has been busted.We have seen similar behaviour on either side of the spectrum", he said.

Union Finance Minister Nirmala Sitharaman in her budget speech had said that two public sector banks will be privatised in the coming fiscal. "All said and done given the banking environment that we are operating in India and the continuous setbacks in the Indian and world economies in the past couple of decades, the assurance of a sovereign ownership for a financial entity makes all the difference".

There are many examples where operation is separated from sovereign ownership.. "So it could be a good model. There are two issues – one is operational freedom and the second is capital. If there is growth opportunity and if capital is to be raised then there are many limitations because there are many claims from different sectors.

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"Even if it is done in stages it would be helpful that you have that sovereign assurance and operational freedom of raising capital", he added.

first published:February 12, 2021, 21:08 IST
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