With the rising momentum of Privatization, the prevailing government of India has been propelling toward curtailed state-owned industries. The Indian government’s approach toward the dilution of state ownership was observable in the last two years, which witnessed the privatization policies in the two yearly economic papers, which pointed to the Privatization of all state ownership to be transferred to private owners in all non-strategic sectors, thus reflecting on its choice to have an economy, which is a blend of private and public sectors working together.
The government’s first and foremost reason was that Privatization would free the state resources for more efficient utilization. Apart from that, Privatization has had several impacts on the Indian economy.
The effects of Privatization on the Indian Economy
The government believes private sectors are more lucid in their work since the private owners are aligned towards making their profit. This makes the entire functioning more transparent, thus vastly minimizing principal corruption. The private sectors are less lenient towards concessions and tend to assess the potential of the required human resources accurately and on par with the firm’s needs. This optimizes the firm’s production and develops a good source of income for the firm. All of this activity contributes to the overall economic growth of the country.
The other side of the coin
Unlike the public sectors, these private sectors are centered around profit maximization, where adjustments can be made in case of emergency and social factors. These do not provide complete information about the firm’s working with their stakeholders, furthermore leads to unlawful possession of business deals and unnecessary conflict among them and bribery. Again, Privatization leads to high price inflation as the private firm no longer gets allowances from the and thus ultimately burdens the ordinary folks of the country.
Privatization is beneficial for the progress and development of state-owned firms, but it has both positive and adverse impacts on the life of the masses.
