Privatisation in India

While India has been slow to privatise overall, there are still considerable success stories, especially in Andhra Pradesh. The former Mahindra-Nissan LC vehicle factory in Zaheerabad was privatised in the 1990s, becoming Mahindra&Mahindra. Under government management it lost money, and only produced four or five vehicles per day. After privatization it now produces more than 50 vehicles a day, and its turnover increased from Rs. 60 crores per year before privatisation to more than Rs. 240 crores now. Government did not have the resources to invest enough to let the company grow so fast – only the private sector could do that.

But capital investment and productivity is not the entire story. The company’s private owners invested heavily in their own workforce. Salaries have increased by 150%, and workers are given training to keep upgrading their skills. Bonuses are commonplace and particularly hard-working and intelligent workers are sometimes given two promotions at once – there are no government-style waiting periods because the private sector bases its promotions and benefits on efficiency. Unions, management and workers collaborate closely, because they each know that more efficiency equals higher profits, allowing the company to pay more and provide better conditions for its workforce. Privatisation means cooperation, and everyone shares in the improvements that they make together.