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Question
Explain any two reasons for privatisation.
Short Note
Solution
The reasons for the privatisation are:
- Creation of Competitive Environment - It is argued that if the ownership of public sector enterprises is transferred to private sector, then the monopoly of public sector enterprises will come to an end. But in fact, it will create a competitive environment which is must for industrial development of a country. For example, we have allowed private sector to the insurance, electricity, telecommunication, etc. In these sectors, a competitive environment has been created which is proving a boom in increasing competitive strength and efficiency.
- Improvement in Managerial Efficiency - Privatisation is a means of improvement in managerial efficiency because the private sector is almost free from political interference.
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Privatization of Public Enterprises
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Chapter 6: The State and Economic Development - QUESTIONS [Page 168]
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