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Question
State the importance of privatisation.
Solution
The following points highlight the importance of privatisation.
i. Consumer sovereignty: Privatisation promotes efficiency and competiveness of an organisation. The sole motive for the private sector enterprises is to earn profit through consumer satisfaction. Thus, privatisation promotes consumer sovereignty.
ii. Technological upgradation and modernisation: The private enterprises work in a competitive environment. To survive in the competition, they constantly work towards the technological upgradations and modernisation so as to improve the efficiency. Such modernisation and upgradations fosters economic growth.
iii. Diversification of products: Due to their efficient and competitive working, private enterprises are able to generate huge profits. These profits are in turn, used for expansion and diversification. Thus, it leads to improved growth.
iv. Impetus to FDI: It is assumed that privatisation would make Indian market more conducive for investment. In other words, it would attract FDI in the economy and thereby, push up the growth process. Thus, emphasis was put on promoting FDIs.
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