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    Privatization refers to the transfer of ownership of government property or businesses to private entities. It establishes free market capitalism and fosters competition, which supporters argue leads to greater choice and lower prices for consumers. However, socialists view it negatively as reducing public control over essential services. Privatization in India has advantages like generating financial resources, optimizing resource use, fostering competition, improving industrial relations, and reducing political interference. It also increases productivity and transparency while minimizing corruption. Overall, privatization frees up resources for more productive use and allows the private sector to contribute to economic development in India.

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    Privatization refers to the transfer of ownership of government property or businesses to private entities. It establishes free market capitalism and fosters competition, which supporters argue leads to greater choice and lower prices for consumers. However, socialists view it negatively as reducing public control over essential services. Privatization in India has advantages like generating financial resources, optimizing resource use, fostering competition, improving industrial relations, and reducing political interference. It also increases productivity and transparency while minimizing corruption. Overall, privatization frees up resources for more productive use and allows the private sector to contribute to economic development in India.

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    5K views10 pages

    IMPACT of PRIVATISATION Aaa

    Uploaded by

    faiz
    Privatization refers to the transfer of ownership of government property or businesses to private entities. It establishes free market capitalism and fosters competition, which supporters argue leads to greater choice and lower prices for consumers. However, socialists view it negatively as reducing public control over essential services. Privatization in India has advantages like generating financial resources, optimizing resource use, fostering competition, improving industrial relations, and reducing political interference. It also increases productivity and transparency while minimizing corruption. Overall, privatization frees up resources for more productive use and allows the private sector to contribute to economic development in India.

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    of 10

    IMPACT ON PRIVATISATION

    ON INDIAN ECONOMY
    I
    Definitions Of The Term “Privatization”

    The term “Privatization” refers to “The


    transfer of ownership of property or
    businesses from a government to a privately
    owned entity.”

    Privatization is frequently associated with


    industrial or service-oriented enterprises,
    such as mining, manufacturing or power
    generation, but it can also apply to any
    asset, such as land, roads, or even rights to
    water.
    Privatization helps establish a "free
    market", as well as fostering capitalist
    competition, which its supporters argue
    will give the public greater choice at a
    competitive price.
    Conversely, socialists view privatization
    negatively, arguing that entrusting private
    businesses with control of essential
    services reduces the public's control over
    them and leads to excessive cost cutting in
    order to achieve profit and a resulting poor
    quality service.”
    FEATURES OF PRIVATIZATION

    One of the prominent feature of


    privatization is the enhanced competitive
    characteristics it provides to the enterprises
    which prove to be fruitful for the business as
    well as the country.
    Privatization is an
    essentially effective tool for restructuring
    and reforming the public sector enterprises
    running without significant aim and mission
    as private sector is perceived to be
    fundamentally more self motivated, prolific
    and reliable for superior quality of products
    and services.
    Privatization can be of three prominent
    types:

    1. Delegation: Government keeps hold of


    responsibility and private enterprise
    handles. fully or partly the delivery of
    product and services.
    2. Divestment: Government surrenders the
    responsibility.
    3. Displacement: The private enterprise
    expands and gradually displaces the
    government entity
    Advantages of Privatisation

    1. Financial Resources
    The main advantage of privatization is to generate
    financial resources for the government in order to
    generate resources disinvestment of public sector
    enterprises.
    2. Optimum Utilisation of Resources
    It has been observed that the public sector has
    failed in the optimal use of national resources.
    The private sector may success in the optimum
    use of resources by maintaining efficiency.
    3. Fostering Competition
    Most of the public Enterprises enjoy the status of
    monopoly. Privatization creates a situation of
    competition for public Enterprises and they are
    forced to improve their efficiency.
    4. Better Industrial relation
    Privatization may increase the number of workers
    and the common man who are shareholders. This
    could make the Enterprises subject to more public
    vigilance.
    5. Reduction in Political Interferences
    The process of privatization reduces political
    interferences in the public sector enterprises by
    giving more representation to the private sector in
    the management of Public Enterprises. 
    6. More Productivity
    The private sector can improve
    productivity by maintaining efficiency in
    its operations.
    Disadvantages of Privatisation
    Impact Of Privatization On Indian Economy

    It frees the resources for a more productive utilization.


    Private concerns tend to be profit oriented and
    transparent in their functioning as private owners are
    always oriented towards making profits.
    Since the system becomes more transparent, all
    underlying corruptions are minimized.
    Effectively minimizes corruption and optimizes output
    and functions.
    Permit the private sector to contribute to economic
    development.

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