Meaning : Privatization is the transfer of control of ownership from the public sector to private sector. It refers to full shifting of property rights from the state or collective ow ners to private owners.
Importance :
The importance of privatization is as follows :
(a) Performance: Privatization leads to good performance. It brings efficiency which always looks forward to survive in the competitive world. The company provides good salaries to the employees and in return they work better and show their performance.
(b) Efficiency: Private companies have a greater urge to produce more goods for the utmost satisfaction of the consumer.
(c) Innovative ideas: Major companies solely depend upon new techniques and innovative ideas to bring their specialized products in a different style at global level.
(d) Goals: Private companies have their specific goals and strive to achieve the endeavor. It shows their consistency to reach the peak and maintain global standards.
(e) Capital: Private concerns many a times raise funds and invest in the financial markets. This promotes faster growth and stabilizes the financial position of the company.
Political implications:
The political implications of Privatization are as follows:
(a) Concentration of wealth: Privatization encourages concentration of wealth in the hands of big business group. It results in great disparities of income and wealth. It goes against the principle of egalitarian society.
(b) More profits: Corporate sectors generate more profits. But they share a meager percentage with the share holders. They enjoy the lion share out of share holders investment. As a result, the gap between the rich and the poor is widened.
(c) Bane to local industries: Cocal people borrow money from indigenous banks and also get loans from government concerns with subsidized rates of interest to start the industry. Multi National Companies with good financial back up survive even in case of loss. Whereas, this is not the case with local industries.
(d) Threat to national interest: Key areas like national defence, space, science and technology are to be retained with the government. Assigning these areas to private sector harms national interests.
(e) Lack of service motto: The private firms are concerned more about their profit rather than providing good serice conditions and extending welfare programmes to its employees and even to society.
(f) No job security : Private companies extract work from employees till they are fit. The companies ruthlessly sack them when they suffer from ill health or fitness problems. So there is no job security for employees in private sectors.
