Privatisation in India is often spoken of as if it were the single lever that could transform our fiscal fortunes and redefine our economic destiny. The recent debate has been animated by assertions that the government has failed to sustain its disinvestment drive, that announcements have outstripped execution, and that the silence of policy today is evidence of retreat.
At one level, that charge is correct. There has been much noise, many declarations, but not much discipline in implementation. Yet the deeper error lies in the belief that privatisation itself is the answer to India’s long-term challenges. The country’s future cannot rest on the hope that selling public assets to private owners will, by itself, create fiscal stability, industrial renewal, and strategic autonomy.
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Privatisation offers relief, not renewal
History tells us that the easy temptation to rely on privatisation is often strongest when governments feel fiscally cornered. The proceeds from asset sales bring temporary relief, but they do not build a permanent foundation for growth. They are one-time transfers that plug gaps rather than transform structures. A state that seeks to raise money by selling its furniture without a plan to replace it risks not only an empty room but also a diminished ability to furnish the future.
India must therefore confront the uncomfortable truth that privatisation cannot substitute for a serious industrial strategy. Without such a strategy, the gains from disinvestment are short-lived and sometimes even counterproductive.
It is both a moral duty and a fiscal urgency for the government to ensure that its central enterprises are made as efficient as possible, with no room for corruption or complacency. Too many subsidiaries and satellite entities have long served as privileged parking spots for rewarding loyalists, hidden in the fine print of balance sheets, their costs diluted in decimal points yet their inefficiencies corrosive in aggregate. To allow this culture to persist is to betray the taxpayer, weaken public trust, and squander national capacity. A state that aspires to lead must begin by cleansing its own house, for only then can its enterprises command legitimacy and contribute meaningfully to national growth.
The larger danger, if we remain hypnotised by privatisation, is that India will slide into the same pattern that much of the West has followed in recent decades. Western economies that once built their strength on manufacturing have allowed themselves to drift into a cycle of financialisation.
Value creation in the real economy has steadily given way to value extraction in the world of capital markets. Factories closed while trading floors expanded. Productive capacity weakened while speculative wealth multiplied. This model may enrich a few, but it corrodes the foundations of sovereignty, resilience, and broad-based prosperity.
India cannot afford to forget how to industrialise at the very moment when the world is entering a new era of sovereign competition. Across the globe, nations are rediscovering the state as a central actor in shaping economic futures. The United States has returned to industrial policy through massive subsidies for semiconductors, clean energy, and advanced technologies. MAGA is only one political reminder of it.
The European Union has unveiled its own frameworks for industrial renewal. China has long pursued a deliberate strategy of state-backed manufacturing at scale. Even smaller nations, from South Korea to Israel, have shown how carefully designed state direction can seed industries of global standing. The lesson is unmistakable. In an age where technology, supply chains, and sovereignty are entwined, no nation of consequence can outsource its future to market forces alone.
The irony is striking. Even as India debates disinvestment and privatisation, the devices on which these debates are written, the operating systems that power them, the cloud servers that store them, and the software that edits them are all products of Western industrial policies of earlier eras. Our dependence on Western technology companies and their platforms underlines how little of the digital foundation is truly our own.
India must therefore begin to write an industrial policy that is worthy of the paper, or perhaps the screen, on which it is set down. This policy cannot be a nostalgic return to the protectionism of the past. It must be anchored in the realities of the twenty-first century. It must identify the sectors where India can compete at scale. It must use the tools of modern statecraft, from targeted investments and procurement and smart subsidies to patient capital and mission-based funding. It must draw in private enterprise as a partner, but a partner in a clearly defined national project rather than a free agent in a marketplace of speculative opportunities.
It must create stable regulatory regimes, credible dispute resolution, and transparent governance so that private investment flows with confidence rather than cronyism.
None of this means that the state should remain everywhere. There are sectors where privatisation makes sense, where private competition is more efficient, where public ownership has long ceased to serve a larger purpose. India should not be shy of withdrawing from those areas.
Yet even here, the use of disinvestment proceeds must be disciplined. They should not vanish into routine expenditure. They should be ring-fenced and redeployed to build the very foundations of the new industrial economy. A sovereign investment fund dedicated to strategic technology and infrastructure would be a far wiser destination for disinvestment receipts than plugging temporary fiscal holes.
The story of India’s economic journey is still in the making. The choices we take in the next decade will decide whether we become merely a large market for other nations’ goods and technologies or whether we become a producer of value and power in our own right. Privatisation in isolation risks leaving us as a consumer society with diminished productive depth.
A genuine industrial policy, crafted with vision and discipline, offers the possibility of creating jobs, building capabilities, and sustaining growth that is both sovereign and strategic. Geopolitical rivalries are redrawing supply chains. Emerging technologies are redrawing industries.
India must place the state back at the centre of economic design. To imagine that we can disinvest our way into greatness is to mistake the sale of assets for the building of power. Power is not sold, it is created. If India is to claim its rightful place in this century, it must create, and to create it must industrialise.
Srinath Sridharan is a strategic counsel with 25 years experience with leading corporates across diverse sectors including automobiles, e-commerce, advertising and financial services. He understands and ideates on intersection of finance, digital, contextual-finance, consumer, mobility, Urban transformation, and ESG. Actively engaged across growth policy conversations and public policy issues.