The privatization wave that swept the world did have its impact on India. But in India the wave of privatization that was generated during the Eighties [1980s] became more powerful when Rajiv Gandhi assumed office as the Prime Minister of India. The issues of privatization in India have to be understood in the context of-- the relative inefficiency of the public sector industries, dearth of financial resources, defective competition system, continuous labor problems and so on. When India became independent it embarked upon planned economic development. In order to accelerate the economic development it started more importance to the public sector on which the government has its control. The Industrial Policy Resolution of 1956 also gave importance to the public sector industries. "The need for achieving planned targets, creation of necessary infrastructure, the necessity of achieving the socialistic pattern of society and the inability of the private sector to enter into several critical areas of production" -- also made the public sector to become an integral component of the economic policy of the government. Government's investment in public sector went on increasing from 129 crores in 5 enterprises in 1951 to about 20,000 crores in 250 state enterprises till the middle of the decade 1990-2000. The growth of the public sector assumes importance in the Indian economy. It contributed to employment opportunities, capital formation, development of infrastructure, increase in exports over the years, and to many other areas. But it failed in certain respects. It failed to generate adequate surpluses to support sustained growth. The public sector was also a failure in obtaining consistent profits, fulfilling labor demands and interests, encouraging industrial researched, reducing the cost of production, achieving technical expertise, and in successfully facing the competitions at the hands of the private sector. The poor performance of some of these enterprises made them to obtain the label of 'sick enterprises'. As a result of that they were left with the later years of Mrs. Indira Gandhi's regime a search for the new policy options began. Gradually a new industrial policy started taking its shape. The essence of this policy is this: The Governmental control in the industrial field must be reduced to the minimum. And the market forces must be allowed to play their role in shaping the economy. With the announcement of new economic policy on 24th July 1991 by Dr. Manmohan Singh, the then Union Finance Minister, India opted for a radical change.
