Privatisation not panacea for all ills : ex-RBI dep guv

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

Fomer RBI deputy governorS S Mundra Friday said that privatisation is not a panacea forall the ills and this myth has long been busted.

A more effective result can be produced if a publicsector character is retained and operational freedom andownership are separated, he said Speaking at a webinar organised by Bengal Chamber,Mundra said that the idea that ownership changes the behaviourof an entities are not proper.

''Privatisation is not the panacea for all ills. Themyth is that ownership changes the behaviour has been busted.

We have seen similar behaviour on either side of thespectrum'', he said.

Union Finance Minister Nirmala Sitharaman in herbudget speech had said that two public sector banks will beprivatised in the coming fiscal.

''All said and done given the banking environment thatwe are operating in India and the continuous setbacks in theIndian and world economies in the past couple of decades, theassurance of a sovereign ownership for a financial entitymakes all the difference''.

There are many examples where operation is separatedfrom sovereign ownership..

''So it could be a good model. There are two issues -one is operational freedom and the second is capital. If thereis growth opportunity and if capital is to be raised thenthere are many limitations because there are many claims fromdifferent sectors.

''Even if it is done in stages it would be helpful thatyou have that sovereign assurance and operational freedom ofraising capital'', he added.