3 forms of privatisation essay
The new economic policy contains provisions for limiting the area of public sector and encouraging expansion of the private sector. There is a strong move to privatize most of public sector undertakings, whose chances of revival are remote. In a narrow sense, privatisation, implies the induction of private ownership in public sector units. However, in a broader sense, it implies induction of private management in public sector units — with or without private ownership.
A New Essay on Privatization in India | Essay
The new economic policy contains provisions for limiting the area of public sector and encouraging expansion of the private sector. There is a strong move to privatize most of public sector undertakings, whose chances of revival are remote. In a narrow sense, privatisation, implies the induction of private ownership in public sector units. However, in a broader sense, it implies induction of private management in public sector units — with or without private ownership.
To enable employees to take over ownership, appropriate provision of loans from banks is also made. It implies a partial induction of private ownership in a public enterprise; the range of private ownership depending on the policy of the State.
It implies sale of assets of a public enterprise to someone who may use the assets for the same purpose or some other purpose. Sometimes a very big public enterprise is split into smaller units; which may become independent in certain product lines or regional operations.
The Government maintains its control interventions by keeping to apex level decisions. A public enterprise, while retaining ownership, may be leased out to a private bidder for a specific period of time, say 5 years. The bidder gives an undertaking of the profits to be passed over to the State. The government reserves the right to replace the bidder with a more promising bidder; if the former fails to come up-to the expectations of the government.
The tendency of privatisation in India may be judged from the following measures adopted by the Government. One aspect of privatisation in India is that industries which earlier were exclusively reserved for the public sector have been deserved i.
As against 17 industries reserved for public sector under Industrial Policy of ; at present only 4 industries are so reserved for strategic and security reasons.
De-nationalisation i. For example, sale of Modern Food Industries, by the Government to Hindustan Levers, is an instance of de-nationalisation, in our country. Disinvestment implies that the government offers to sell a certain percentage of their shares in public enterprises to — general public, private financial and investment institutions, mutual funds and workers, with a view to:.
For disinvestment purposes, the Disinvestment Commission was set up by the Government in August , to work out modalities of disinvestment in some 40 public enterprises.
With the emergence of strong labour unions in India, privatisation in the sense of de-nationalisation is not considered possible. These unions are all against attempts to privatisation of profit making public sector units. The government is, therefore, slowing down the pace at which it wanted to go ahead with its policy of disinvestment. As such, between and , out of a target of Rs. Disinvestment collections in have been Rs. Times of India, January 28, Economic Policy of Liberalization in India: 7 Elements.
Privatisation can mean different things including moving something from the authors identified three methods of privatization: "privatization by sale", "mass privatization", and "mixed privatization". Three Essays on Privatization, State Ownership, and Corporate Policies. poorly developed financial markets, suggesting that implicit borrowing in forms of.
Privatisation involves selling state-owned assets to the private sector. It is argued the private sector tends to run a business more efficiently because of the profit motive. However, critics argue private firms can exploit their monopoly power and ignore wider social costs. Privatisation is often achieved through listing the new private company on the stock market. In the s and s, the UK privatised many previously state-owned industries such as BP, BT, British Airways, electricity companies, gas companies and rail network.
Privatisation means the transfer of assets from the public government sector to the private sector.
Privatisation or privatization in American English can mean different things including moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when a heavily regulated private company or industry becomes less regulated.
