Sandhu

Topics: Public sector, Economics, Privatization Pages: 5 (1016 words) Published: August 29, 2013
International Journal of Advanced System and Social Engineering Research ISSN 2278-6031,
Vol 3, Issue 1, 2013, pp18-22
http://www.bipublication.com
ADVANTAGES AND DISADVANTAGES OF PRIVATISATION IN INDIA
Anant Kousadikar and Trivender Kumar Singh*
*Jatan Swaroop PostGraduate College, Kayasthwada,Sikandrabad(U.P.), Distt: Bulandshar [Received-05/12/2012, Published-17/01/2013]
ABSTRACT
Privatization in generic terms refers to the process of transfer of ownership, can be of both permanent or long term lease in nature, of a once upon a time state-owned or public owned property to individuals or groups that intend to utilize it for private benefits and run the entity with the aim of profit maximization. In other words, it is a route from public or state ownership to private players or a group. From the other point of view, it is a strategy that provides advantages to a few at the price of many. However, this is always subjected to the circumstances involved. In this paper, the aim is to understand the major advantages and disadvantages of privatization in this country. Index Terms: Privatisation, advantages, Public administration. I. INTRODUCTION

Privatization is a managerial approach that has
attracted the interest of many categories of people-
academicians, politicians, government employees,
players of the private sector, and public on the
whole. As per the opinion by the subject experts,
privatization can be advantageous in terms of the
higher flexibility and scope of innovation it offers
along with cost savings, many a times. However,
other specialists defiantly debate that privatization
has an adverse impact on the employee morale and
generate fear of dislocation or termination. More
likely it also adds on to the apprehensions
pertaining to accountability and quality. Experts
both advocate and criticize privatization making it
more or less a provocative decision that calls for a
diligent scrutiny by the decision makers in
assessment of pros and cons attached to the
concerned policy [20].
In India, privatization has been accepted with a lot
of resistance and has been dormant initially during
the inception period of economic liberalization in
the country [8]. The article intends to analyze the
present status of privatization in India and
summarize its advantages and disadvantages in
context with the Indian Economy.
II. PRIMARY FEATURES OF PRIVATIZATION
Espousing market principles by public policy
makers has evolved as one of the prominent
characteristics of the contemporary public
enterprise management which encompasses
privatization as a primary facet. Privatization of
State- owned enterprises has developed as a critical
tool for economic policies pertaining to progress
and development of developing countries.
One of the prominent feature of privatization is the
enhanced competitive characteristics it provides to
the enterprises which prove to be fruitful for the ADVANTAGES AND DISADVANTAGES OF PRIVATISATION IN INDIA Anant Kousadikar and Trivender Kumar Singh 19
business as well as the country. However,
privatization contracts are greatly influenced by
merger variables and even global issues and are
structured on the basis of manipulation of the
government and the private players along with the
administering jurisdiction [19]. Perotti and Guney
(1993) cited in Al-Zuhair[2], have supported
privatization as a vital source to enhance economic
enticements, magnetize better managerial skills of
the private sector, extend the share ownership,
lower the public borrowings in order to sustain
sustainable services. Shirley (1988) cited in AlZuhair [2], view privatization as an attempt to enhance market potencies. Privatization is an
essentially effective tool for restructuring and
reforming the public sector enterprises running
without significant aim and mission as private
sector is perceived to be fundamentally more self-
motivated, prolific and reliable for superior...
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