Privatization vs Public Sector

Topics: Public company, Privately held company, Public sector Pages: 2 (527 words) Published: November 20, 2012
What is privatization?
 It is the process of transferring ownership of a business, enterprise, agency, public service or public property from the public sector (a government) to the private sector, either to a business that operates for a profit or to a non-profit organization. The term can also mean government outsourcing of services or functions to private firms, What is public sector undertaking?

In India, public sector undertaking (PSU) is a term used for a government-owned corporation (company in the public sector). From my point of view, privatization is going to be a remedy for the financial ailments of our public sector undertaking. Let’s discuss some factors about these two types of organizations. 1. Performance. Public sector undertaking tends to be bureaucratic. A political government may only be motivated to improve a function when its poor performance becomes politically sensitive. 2. Increased efficiency. Private companies and firms have a greater incentive to produce more goods and services for the sake of reaching customer satisfaction and hence increasing profits. A public organization would not be as productive due to the lack of financing allocated by the entire government's budget that must consider other areas of the economy. 3. Specialization. A private business has the ability to focus all relevant human and financial resources onto specific functions. A public sector undertaking does not have the necessary resources to specialize its goods and services as a result of the general products provided to the greatest number of people in the population. 4. Corruption. A public sector undertaking is prone to corruption; decisions are made primarily for political reasons, personal gain of the decision-maker, rather than economic ones. Corruption in a public sector undertaking affects the ongoing asset stream and company performance, whereas any corruption that may occur during the privatization process is a one-time event and does...
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