What Is Privatisation?
In economics, privatisation refers to the transfer of business or property from the Govt. to the private sector, individual or non-governing party. India reforms privatisation in budget 1991, the budget known as “New Economic Policy or LPG policy.
In other words privatisation refers to the transfer of ownership control & management from public sector, Govt enterprises to private sector enterprises.
Features & Characteristics Of Privatisation
- Privatisation involves transfer of ownership.
- It reduces the state level control over the Indian economy.
- It increases competition in the market.
- It improved the efficiency.
- It improved the investment potential.#It deals with short term profits over long-term or environmental goals.
- It focuses on profit motive.
- Privatisation leads to the use of market pricing for goods and services.
- It leads to cost saving, better quality service and increased innovation.
Objective Of Privatisation
For the sake of clarification some of the most important objective of Privatisation are highlighted below:
- Privatisation aims to improve delivery of service or asset management.
- Reduce Govt debt by selling off assets and charging for services.
- It deals with encouraging competition among other sectors or industries.
- To attract investors and investment for quality and quantity of goods and services.
- It aims to improve the capital investment capacity of industries or companies.
- Reduction of political involvement.
- Encourage Innovation for business development.
- Providing strong base for the inflow of Foreign Direct Investment (FDI)Improve the efficiency of Public Sector Undertakings (PSUs)
- It improves the economy by generating jobs and economic growth.
Ways Of Privatisation
- Transfer of ownership
- Disinvestment
- Public auction
- Public tender
- Direct Negotiations
- Lease with a right to purchase
- Transfer of enterprises controlled by Municipalities.
