Over time, insistence on maintaining government control in public sector enterprises was steadily diluted, and a broader consensus evolved towards eliminating government control in some areas. The United Front government in 1996, established a Disinvestment Commission and specifically requested the Commission to identify units in 'non-strategic and non-core' areas where government stake can be reduced to a minority or even to zero. The Commission has examined fifty public sector enterprises and recommended disinvestment of a majority stake, with transfer of management control, in several cases. Implementation of these recommendations has been slow, but effective privatization in a few PSEs, with private investors being offered a majority stake and effective management control now appears very likely in the near future. This clearly heralds a very different approach to public sector reform and this approach has been further reinforced by the BJP government's announcement that government stake in public sector enterprises will be reduced to 26 per cent 'in the generality of cases'.
The area of public sector reforms where very little has been done relates to the treatment of chronically loss-making public sector enterprises. While some of these units can be turned around, many have been making losses for a very long period of time and are unlikely candidates for revival.[1] Summary closure of these units was ruled out in the early years of the reforms and the government decided instead chat the scope for reviving each unit would be carefully examined. Only those units where revival was found to be economically feasible would be revived while others would be closed down. The feasibility of revival was to be determined by the Board for Industrial and Financial Reconstruction (BIFR) and government would take a decision based on the Board's recommendations. Several public sector units have been identified as fit for closure through this process, and the government has even decided on closure in many cases, but no unit has actually been closed because the decision has been challenged in courts by labour unions. The BJP government in its first budget announced a generous retrenchment package to be offered in cases of closure in order to overcome labour opposition.
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