PRIVATIZATION

Meaning

Privatization is the process of transferring ownership of a business, enterprise, agency, public service or public property from the public sector to the private sector.

When the Ownership Management and Control of Business and Industrial in the hand of Private enterprises it is called Privatization

WHY PRIVATIZATION?

To reduce government involvement in commercially viable activities.

Increase efficiency in the delivery of programs and services.

Provides competition in market place which transfers the lower price and greater choice for the consumers.

Impact Of Privatization On Indian Economy

It frees the resources for a more productive utilization.

Reduce the government's financial and administrative burden.

Permit the private sector to contribute to economic development

Effectively minimizes corruption and optimizes output and functions

Industries which are not reserved for private

Indian Atomic Indian railways Chemical Arms fertilizers Hazardous ammunition

chemicalsCigarette

Objective

The emergence of multinational entities

Technological changesEmergence of local capital

market and entrepreneurship Dissatisfaction with performance

of public sector

Merits of privatization

Minimum Cost Of Production-As a Private Sector Encouages maximum and most efficient utilisation of resources

Higher Capital formation-try to save major part of Income so that may invest in there business.

Improve service quality Lower prices Employment Increase efficiency and innovationUse of updated technology which

helps to reduce wastage

DEMERITS OF PRIVATISATION

Social Welfare is IgnoredWastage due to CompetitionClass Struggle(rich and poor)Decline of Competition

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