Privatization in India

With the onset of economic liberalization in India, competition is rising among every sector and privatization have made a huge impact on it. Now you must be thinking on what privatization exactly means. Privatization mainly means transfer of governmental control over public-owned resources to private control. It can also be called as denationalization or disinvestment. Privatization can be total or partial. Total privatization means giving total control of public-owned resources to private organizations and partial privatization means giving partial control of public-owned resources or organization to private organizations.

Advantages of Privatization

Increases Efficiency : The state owned organizations lack efficiency as it increases monopoly. But, privatization increases efficiency and the reason behind it is the growing competition among the private organization. In order to remain in the competition, they need to work efficiently and this increases efficiency.

Lessens Political Interference : Privatization lessens political interference as it is owned by private organizations and Government has no involvement in it. Moreover, government owned organizations are poorly managed and bureaucracy prevails in it but in private organizations, there is no space for bureaucracy and it properly managed.
Broadens the scope of shareholders: Privatization also allows general public to have shares in private organization. It increases the say of public in the functioning of the private sector and helps them to improve. Privatization thus broadens the scope of shareholders.

Reduction of PSNCR : Privatization will help in reducing PSNCR as private organization works more efficiently and increases their profit. These profits can be taxed by government thus helping in keeping the PSNCR low.

Long Term Effect : Generally, state owned organization lacks infrastructure as the Government looks into it as a means to remain in power and win election and thus giving less importance to the infrastructure of the organization. However, this is not the case with private organizations. They are more concerned about improving the infrastructure as it offers long-term benefits.

Disadvantages of Privatization

Concentration of Wealth: The large private organizations like banks etc will try to concentrate wealth in the hands of private persons, thus leading to rich people becoming richer and reaping the benefits of privatization. Privatization also leads to redistribution of wealth.
Maximization of Profits: Private organizations are more interested in making maximum profits and thus serve only those who are capable of purchasing, which does not severe the masses. This will lead to more and more class struggle that already exist in India.

Increases Unemployment : Private organizations are more into maximization of profits and work more efficiently with fewer workers and thus leading to unemployment of many people.

Lack of Transparency : With total privatization, the transparency becomes lesser as it is difficult to monitor the working of the organizations. Their sole aim is to make profit and for that they cut down and compromise on several things and unless the contract between the government and the private party doe not contain specific reporting criteria, it leads to lack of transparency.

Threat to National Security : Privatization of sectors like railway, aviation and telecom, etc can be a threat to National Security as there will be no saying of Government in working of the sectors.

Privatization has definitely brought about a lot of change in India’s economy and has helped India to grow and develop. It is more liked and favored today even by the general public. However, after looking into both advantages and disadvantages of privatization in India, it should be allowed by maintaining a proper balance between both. The disadvantages of it can be monitored or be controlled by implementation of proper laws so that it does not harm the economy of our nation.

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