An exploratory study on the impact of pro-market reforms on the Indian corporate sector

Abstract

Pro-market reforms were expected to increase competition, improve efficiency and reduce agency costs by improving the institutional environment in emerging markets. In an attempt to establish the macro–micro linkages of these goals, this paper aims to analyse the impact of reforms on the performance of firms belonging to different ownership categories. We find that while state owned enterprises have shown signs of convergence, the performance of other domestic firms has stagnated. Meanwhile multinational subsidiaries have shown consistently better performance, raising questions on the motive and direction of reforms. We end by discussing the policy implications and avenues for future research.

Keywords:

• state owned enterprise
• economic reforms
• ownership
• financial performance
• new institutional economics
• public versus private
• emerging economy

Notes

1. 1991 to 1997: Coalition period.

1998 to 2004: NDA regime (National Democratic Alliance).

2005 to 2008: UPA I regime (United Progressive Alliance).

2009 to 2014: UPA II regime (United Progressive Alliance).