Liberalization Privatization and Globalization part - III

 

          Privatization

         It is defined as “Transfer of ownership, Management and control of PSEs (Public Sector Enterprises) to private entities.”







 

Objectives of Privatization

Ø To improve financial strength of economy

Ø To provide strong momentum for capital inflow in terms of FDI and FPI

Ø To improve efficiencies of PSUs

Ø To build new infrastructure for economic growth and development.

Ø To introduce new and advanced technology



 

Advantages of Privatization –

Ø Optimum utilization of resources

Ø Improved performance and customer services

Ø Political non-interference

Ø Generation of new employment opportunities

Ø Establishment of economic democracy

Ø Enhanced productivity, efficiency and effectiveness due to increased competition

Ø Participation of private entities in economic growth.

Ø Increase financial resources and government revenues can be used in infrastructure development.

Ø Increase in capital inflow and investment in economy due to higher returns.

Ø Technological advancement

Disadvantages of Privatization –

Ø Profitability is one and only goal of private entities

Ø Social security and social services of employees are at stake.

Ø Increase in Socio-economic inequalities

Ø Increase in regional disparity and regional inequalities

Ø Concentration of economic power and financial resources in few hands.

Ø Reduction in national assets.

 

Solution towards Privatization

          Recently government has launched new scheme NMP (National Monetization Policy) which is a good step towards enhancing private sector role instead of privatization of national assets.

     NMP – leasing of union governments’ unutilized or underutilized core assets to private entities for specified period of time to create capital, which can be used in development of Greenfield projects (new projects).

        

            

              It is important to realize that somewhat privatization is necessary for economic growth of country but is not the solution of sickness of PSUs.          

       Changing the working culture and ensuring a competitive environment by providing adequate training, modernization in line with new technology and increased efficiency and productivity will be more significant step towards economic development of nation.

-        By Pooja Gupta

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