Closure of Central Public Sector Enterprises in India: a case study

Abstract

Changing objective circumstances over time often warrant the closure of public sector enterprises that may have originally been established due to compelling public purposes. Many public enterprises lose their relevance and public purpose, become chronically loss making and are a recurring drain on public resources. Yet it has been found to be extremely difficult to actually close down any such enterprise due to a host of institutional constraints unique to the public sector. Closing down a public enterprise is difficult but not impossible, given the will and sincere execution. It has been done in India. While the practicalities have to be worked out, closure of any entity needs to be implemented sensitively given the human dimensions involved. This paper brings out a case study of the experience in implementing the closure of five public sector enterprises in India during the period 2014-16.