LONG ESSAY ON PRIVATIZATION: MEANING, REASONS AND EFFECTS – ESSAY 5 (600 WORDS)
Meaning of Privatization
Many industries and sectors in India as well as other countries come under the public sector which means they are owned and run by the government agencies. However, gradually there has been a shift from these being governed by the public sector to the private sector. This shift has been termed as privatization. A number of factors have led to this change. Many developed nations started out with privatization of different industries to overcome the limitations faced by the public sector and India followed the league soon.
Under privatization either the government held assets have been sold to the private owners and they have been given the whole and sole responsibility of handling certain industries or the government has allowed the private businesses to participate in the functioning of some industries.
Reasons of Privatization
Here are some of the main reasons for privatization:
- Better Services
Until a particular industry is under the public sector, it is governed by the government. There is no competition and no drive to perform better. The services offered are mostly average as there is no comparison and no threat of losing the race. However, when a particular industry goes to the private sector, the private owners are expected to set a bar for the quality they are expected to deliver. They work hard and try to give in their best else they are at a risk of losing the task assigned to them and suffering immense loss. This ensures better service to the customers and has been one of the main reasons for privatization.
- Better Customer Support
Besides getting good service from the private sector employees, the consumers also get a good customer support. The condition of the government owned services in India is known to all. The government employees are least interested in completing their tasks on time. Consumers need to call up over visit their offices several times in order to get their tasks done. However, this is not the case with the industries that have been owned privately. This is another reason why privatization was considered.
- Cope up with Budget Deficit
The government has a particular budget set for each industry. It requires accomplishing all its tasks within that particular budget. Many industries under the public sector had begun suffering from losses and faced budget deficit. In order to cope up with this problem the government considered the option of privatization.
Effects of Privatization
The impact or effect of privatization on the consumers and the nation as a whole is a major topic of debate. Here is how privatization has impacted the society:
- Lowered Government Burden
The government has a limited budget assigned for every sector and many of the sectors were facing monetary issues. The government had to take debt to fulfil these and had come under huge debt. Privatization helped in lowering the government debt as well as the overall burden of the government.
- Improved Service
The quality of services provided to the consumers improved as a result of shift to the private sector. In order to build their reputation and make a foothold in the market the private owners provide good sales as well as after sales service to the customers.
- Change in Pricing
The prices of certain goods and services have increased owing to privatization. The consumers are suffering a great deal because of the price rise especially in sectors where the private owners have a monopoly. However, in certain sectors the competition has led to a fall in the prices of certain commodities and services.
Conclusion
The decision of privatization of various sectors had been taken to lower the burden of the government and it has been successful in doing so. However, for the general public the impact of privatization has been both negative as well as positive.
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