Meaning Methods of privatization Advantages and disadvantages of privatization

Privatization was introduced during the eighties by Rajiv Gandhi

The government of P.V. Narsimha Rao gave actual speed by introducing the New Industrial Policy
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Meaning of privatization
Privatization is the process of participation of private sector in the ownership and management of public sector

Out of 16 industries, 6 industries are not reserved for private sector. They are

Cigarette

Atomic energy

Indian railways

Chemical fertilizers Arms and ammunition Hazardous chemicals

Methods of privatization
Sale of the entire entity : The government sells the entire public sector unit to private sector.
Initial public offering :The government issues shares to the public offering to reduce government stakes.
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Management control : Though not the private company the government transfers the management control to the new company to make it more accountable.

Sale to employees : Employees have the first choice to buy the shares of the shares of public limited company when they are put for sale.
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Examples
BSCS was privatized today it is owned by Reliance energy

Telephone companies now are owned by private companies also.

Hindustan and Bharat petroleum planning to be a part of Oman oil company to have a great supply of oil to India in lower price.

Positive effects of privatization.

Better services to the consumers

Use of updated technology which helps to reduce wastage

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Helps in infrastructure development with the help of taxes received from business firms

Helps the government to concentrate on social problem

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Negative effects of privatization

Investment in industries of comfort and luxurious products instead of necessary products and problem of optimum use of capacity

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Aims at making profit which adversely affect the interest of the community

Problem of unemployment

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Market share of privatization is increasing year by year.

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Does India need more privatization?

The central government owns public sector units which have accumulated losses of Rs.52,551 crore losses that India can no longer afford. Also that shareholders are getting less return on their investment. So, India needs to private more industries.
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Governments role in privatization.

Government acts as a referee protecting both the consumers and the investors. Government protects the consumers from unwarranted prices.

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