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The ecnomoist

India’s stealth privatisation

Government has been promoting the private sector—by letting state-run firms wither

In 2007 india combined two troubled state-run champions, Indian Airlines for domestic flights and Air India for international ones, in the hope that consolidation would produce higher profits and happier flyers. Instead, the merger created unhappy unions, shabbier service and mounting losses. Last year a plan to privatise the airline collapsed for lack of bidders with pockets deep enough to afford it.

Such shambles invariably garner attention. What has passed largely unnoticed is the steady decline in the market share of state-run firms. Despite the nationalist mood that has coloured India’s marathon general election, which concluded on May 23rd, it is likely to continue.

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