Public and private ownership and privatization in India

India's state-owned enterprises are widely believed to be inefficient. Indeed, their supposed inefficiency forms the basis for the ongoing program of privatization. However, there is a dearth of studies that documents such inefficiency on any rigorous basis. Yet, since improvement in firm efficiency is one of the basic objectives of privatization, one would imagine that, in formulating privatization policy, it is important to know whether efficiency is indeed lower in the public sector than in the private sector.; The three essays here compare efficiency in the public and private sectors in the industrial sector as well as in banking. They do so using financial measures as well as input-output quantities. They also compare the performance of enterprises before and after disinvestment—the limited privatization that has taken place in India.; We find that performance in the private sector is not significantly superior to that of the public sector in the aggregate when we look at the most recent period consequent to economic reforms. Nor is private sector performance superior across seven or eight industrial sectors, whether we compare performance using financial ratios or input-output quantities. While performance has not improved on the average in the industrial sector consequent to disinvestment, there has been improvement in performance in the majority of firms.; In banking too, there is a trend towards convergence in performance between the public and private sectors in recent years, going by different measures of performance. Performance has improved following disinvestment but this cannot be ascribed entirely to operational factors.