The transfer of ownership, property or business from the government to the private sector is termed privatization. The government ceases to be the owner of the entity or business. Currently PSU’s like Air India, BSNL are loss making affair for long and there is a demand to privatise them .
Benefits of Privatisation are as follows:
- To improve the efficiency and effectiveness of the firms.
- It will move the idle capital lying with PSU out in the economy and the assets will be better utilised.
- PSU especially in those sector where private players are there and service providers like Telecom, Air line etc. are needed to be handed over to Private sector.
- It leads to better consumer satisfaction, greater market discipline, more dynamicity etc.
- There is zero political interference.
- Promotes competition which will help in giving consumer lower price.
Hence, the Privatisation offers various benefits but it has negative side too like not realising the true cost of PSU’s, difficult to sell loss making PSU’s, Job loss, Nexus of Politics and corporate nexus, The process of sale out is non transparent, rent seeking corruption.