A New Paradigm for Providing Economic Services

There was a significant policy shift, in 2005, when the government took the decision not to privatize any State Owned Enterprises (SOEs). Instead, priority was attached to improving their operations. In order to achieve this objective, all SOEs have been called upon to revisit their vision, strategies and business models in line with national objectives. The government invested Rs. 635 billion in SOE’s during 2005 – 09. The return on investment to the government is generated through levies and dividends declared on SOE profits after tax. These rose from Rs. 5.9 billion in 2005 to Rs. 23.7 billion in 2009. The most significant contributors were the state-owned banks, the Telecommunications Regulatory Commission and the National Insurance Trust Fund. There has also been a turnaround in the performance of the non-functioning SOEs. This has enabled the government to reduce its subventions (recurrent and capital) to these enterprises from Rs. 2.8 billion in 2006 to Rs. 486 million in 2009.