Privatization is just like a painkiller mediciene, it is very benificiary but along with a lot of losses. It may help in the growth of Indian economy but it will also increase corruption, unemployment etc.
What is privatization ?
: The transfer of ownership, property or business from the government to the private sector is termed privatization. The government ceases to be the owner of the entity or business.
Privatization is considered to bring more efficiency and objectivity to the company, something that a government company is not concerned about. In 1991, during the governance of P.V.Narsimha raw India was suffring from economical disaster. To tackle these problems the, then Finance Minister Dr. Manmohan Singh introduced some major economic reforms. Now, we call it the liberalization of the Indian Economy and the LPG reforms.. Here is L for Libralization, P for Privatization and G for globalization.
Advantage of privatization.
- Private companies always have a better incentive than public companies. The managers and officials of a private company have skin in the game, i.e. their income is related to the performance of the company. In public companies, such an incentive is not present. So privatization usually leads to higher efficiency in the company.
- In a public company, there is a lot of political interference. This may dissuade the company from taking economically beneficial decisions. However, a private company will not let political factors affect their performance.
- In public companies, at times the government can only think about the upcoming elections. So all their goals may be short-term in the process of trying to gain favours of the voting public. But a private company does not have such restrictions. They have long-term goals and ambitions and steer the company in the right direction.
