Impact of Deregulation on a Public Sector Firm

This paper explores the manner in which state-owned telecommunications equipment manufacturer Indian Telephone Industries was affected by the radically altered market conditions brought about by the opening up of the economy and the loss of its monopoly status. ITI's experience shows that the government's market-oriented reform programme ended up creating anything but a level-playing field for public enterprises. On the one hand, by eliminating its monopoly privileges but not the constraints flowing from state ownership, and on the other hand, by imposing new market-related constraints, deregulation had an extremely destabilising effect on the operations of ITI.