The collapse of GM in the US threw open debate yet again on the merits of Free Enterprise and mixed economy models. We need to stick to the mixed economy model to protect and generate jobs and usher in balanced development of backward regions in the nation. We need not opt for blind Private Enterprise and reinvent the wheel at a huge cost.

The iconic American Symbol of Private Enterprise GM filed Bankruptcy petition and President Obama declared that the Government is acquiring 60 per cent or more share holding of this auto giant. However, he made it clear that the managing the company will be entrusted to an eminent group to achieve turnaround and bring the glory back to America.

This step by government of the USA is a significant deviation from the policy of free enterprise and nothing short of nationalisation. Compared to the US economic model, the mixed economy model followed by India was ridiculed by many who wished that the country open up and give free hand to private enterprise in tune with the successful economic models across the nation.

It is true that the red tape, inefficiency and failure to bring profits to government characterised the Public Sector till a few years back. However, it need to be remembered by everyone that the policy of public sector was guided not purely on the motto of profits but to spur growth in the remote and backward areas of the country and to provide employment. It has succeeded in both the areas. With the competition lurking large from the liberalised economy, the public sector too has shaken off the lethargy and started functioning in such a way that there is healthy competition between the public sector and the private sector. Indiscriminate privatisation only encourages businessmen with profit motive alone take over the Public sector businesses.

According to 2006-2007 estimates, the public sector in India earned profits to the tune of Rs 81550 crore and achieved a turnover of more than Rs 9,60,000 crore. The Central public sector enterprises contributed as much as Rs 1,26,900 crores by way of taxes and more than Rs 20800 crores by way of interest and dividend to the Central Government. The Public Sector employs 16 Lakh people and there by providing employment to sizable section of the population. The national policy on public sector envisages that generally profit making PSUs do not qualify for privatisation.

The tycoons of Private Enterprise in India are clamoring for policy decision that aims at disinvestment of PSUs to meet the growing fiscal deficit.

It is for the government to think of the best way to bridge the fiscal deficit. Why the Private Industry Moghuls clamor for disinvestment is a matter of concern for the common man. More over disinvestment as a policy to fund the fiscal deficit is fraught with grave financial consequences. The Private Industry in India wants reduction of taxes and lower interest rates for increasing their profits further and wants the government to disinvest in PSUs and fund the social sector is a selfish move.

We need to invent India specific solutions for the economic problems and not to go by the wish list of the Private Industry and Private Financial Institutions. There need to be healthy but friendly competition to offer goods and services to the common man at a reasonable and affordable cost. If the Government opts for Disinvestment as the policy option, it endangers employment opportunities and balanced development of the nation. Private Enterprise alone is not the mantra that can ensure rapid development and growth of the nation need to be kept in mind.