Defination:

Privatisation refes to any process that reduces the participation of the

state/public sector in econoimc activities of a country.Private sector has
been allowed to play a major role in different types of economic activities.

Aspects:

(a) Transfer of the government ownership of productive assets to the

private sector.It implies denationalisation.
(b) Disinvestment:-sale of a part of equity of public sector enterprise to
private capital.
(c) Entry of private sector industries into the exclusively reserved
industries for the public sector.
(d) Limiting the scope of public sector and on further expansion of the
exisitng public sector.

Argument for Privatisation:-

• Poor performance of public enterprise:- In view of poor performance

of public sector undertakings,public sectro has become a burden on
national economy.
• Rising budgetary deficits:- budgetary deficits are increasing which
further contributes to rising prices.
• Growing non-developmenatal Expenditure:- non developmental
expenditure weakens our financing.
• High capital-output ratio:- high capital investment but poor output
has lead to demand of privatisation.

Policies:

• Contracrion of public sector:- list of 18 is reduced to 7 & only

3(atomic mineral,railway n atomic energy) are reserved for public
sector.
• Disinvestment:- shares of public sector undrtakings are being sold
among the workers and public for greater praticipation of private
individuals.
 • More institutuional credits:- more institutional credit to private
sector enterprises from national financial institutions.according to
the New Industrial Policy,these financial institutions will not insist
for conversion of loans into share capital.

Argument against privatisation:

• Unbalanced growth:- Privatisation is no gurantee for social

betterment.It results in unbalanced growth of the economy.Public
sector is indispensable for the development of all sectors/sections of
the economy.
• Adverse effects on standard of living:- Privatisation has nothing to
do with standard of living of the masses.
• Less scope for the development of infrastructure:- economic and
social infrastructure remains untouched.
• Growth of state monopoly:- privateisation tampers public sector
and prohibits any development .