What is Privatization? | A boon or a curse

 Privatization is being a matter of concern for about 3-4 months. How Privatization is impacting the Indian economy? What will be the Influences of Privatization on Employment sector? Is it really a healthy step to boost and revive the Indian economy?  

I hope this article will help you in finding the answers of all the questions emerging in your minds. First of all, we need to discuss what exactly the privatization is? 

In general Privatization means to transfer the assets or ownership of any enterprise from public sector to private sector. 

The privatization varies in its distinct forms-

 1. Delegation-

Government holds responsibility and private enterprise handles fully or partly the delivery of product and services (management). 

2. Divestment-

Government surrenders its responsibility. It may keep some ownership but will be a minority stakeholder in the enterprise. 

3. Displacement-

The private enterprise expands and gradually displaces the government owned entity. 

4. Strategic Disinvestment-

Government transfers the ownership as well as control to some other entity (specifically private company) 

As per the strategic disinvestment policy of Government, it would imply the sale of a substantial portion of shareholding of central public sector enterprises (CPSE) of upto 50% or above as the competent authority may determine, along with the transfer of management control. 

History of Privatization 

History of Privatization dates back to nearly 30 years ago. In 1991, India’s economy was facing a severe recess because of superfluous debt. In order to cope up with that situation, a new economic policy had been introduced by the then Finance Minister (great economist) Dr. Manmohan Singh under the government of P Narsimha Rao, the then Prime Minister. The new economic policy introduced the great LPG reforms, one of which is Privatization. The budget proposed by Dr. Manmohan Singh in year 1991, warmly welcomed Privatization and the Foreign Investment with red carpet, burying Nehru’s socialism. 

The government had sold shares costs ₹3038 crores to private sector (10,000 plus foreign investments). In 1993, private sectors even allowed for banking. 

Hence, privatization has played a major role in reviving India’s economy from the Intensive Care Unit. No doubt Privatization is totally okay for 1991. But, in 2020? Do you really think that we should travel on the same boat? 

That time India need support to cope up with the huge debt and this can be done only with the help of private sectors but now India have enough resources to groom, we may need a technological or development support but the hand overing of public sector enterprise is not the solution in current scenario.  

Present Scenario 

It seems from here that the government was enticed to privatization, in which the governmentalists gave a lot of support through corruption. There is no area left of the democratic system which has not been pushed by corruption from public sector to privatization. 

Troubled by the loss of governmentalization, the support of privatization became a compulsion and the leaders, officials and employees took the advantage of same. They removed the poverty of their own people as well. The public is crying. They are facing harassment by paying lump-sum electricity bills, forced to get expensive treatment, getting education is like breaking the stars of the sky for the poor. No doubt Govt. has opened the schools, colleges and hospitals for weaker sections but their condition is not hidden from anyone.  

Why privatization is being promoting? 

Perhaps the reason for promoting privatization is that its results are positive which are not properly targeted under governmentalization. On the contrary, in fact, as mentioned above, corruption becomes so common due to negligence and lack of transparency. The focus is being on the practice of taking care of one’s own personal interest. The Leaders, officers, employees are more or less trying to give a boost to privatization in order to fill their own pockets and welfare of their loved ones. There is More work for less money in privatization. 

There is a phrase, “The Government property is our own”. For some people this means, its our own then exploit it. They ignored that, “The government property is our own, keep and care for it.” 

Impact on Citizens 

By the way, the public is suffering from both, because the private sector is going through competition, as a result the public has to contend with inflation i.e. everything is expensive and less inward. Workers are not discharged until private sector bosses take 10,000 jobs for a salary of Rs 1,000. Here, if we talk about the government sector, whether to forward a file or do some other work, ‘offering’ seems. Without ‘offering’ nothing happens. Even today this practice continues in the government sector. 

And the public is crushing in private and governmentalization …! 

Privatization of Railways 

The Ministry of Railway, runs Indian Railways to ensure public welfare and not just as an objective of making profit. Indian Railways is the world’s fourth largest railway network with a route length of 67,415 km. 

According to the government, Indian Railways has a need of about Rs 50 lakh crore for the coming 12 years to develop the raliways. While the government is unable to afford a huge amount to spend only on this sector. This is the main reason presented by Government of India for the Privatization of Railways. 

Advantages and disadvantages of railway privatization: 

  • The government argues that all trains will be built under the ‘Make in India’ project, which will create employment, which is a very trivial argument because the trains can be manufactured under ‘Make in India’ project without giving it to the private sector. 
  • Private sector can provide better maintenance facilities and the trains will arrive on time under private sector. This is also not a robust argument, because the government can remove the deficiencies with all his capabilities due to which trains are late. Afterall, what such thing will the private players do in order to prevent trains from being late? And if the private players can stop the trains from getting late, then why not the government? 
  • Passengers will be able to get better security because private investors will spend more money and bring new technology. This argument has some potential as the government’s fiscal deficit is continuously increasing and the affordability is gradually decreasing. 
  • It will help to bridge the gap between demand and supply between tickets. Because the number of trains will increase providing world class facilities. 
  • These trains will be constructed in such a way that their maximum speed can be kept at 160 km/hr. This will save people’s time. 
  • The biggest disadvantage of railway privatization is that it will end a large number of government jobs because private enterprises will like to maximize profit by getting more work from less number of employees. 
  • There is also a possibility that private trains should be given a clear signal, so that those trains will arrive on time and the government trains will keep waiting outside the station for signal. 
  • The worst effect of privatization will be the increase in railway fares, which the poor and middle class will not be able to afford. 

Impact on Employment 

I am explaining you with an example- we all are quite familiar with Airlines job profile. A candidate needs to clear AFCAT exam and should have high quality skills with extraordinary requirements to get job in Airlines. The fee structure for the courses and diplomas is this much high that only creamy layer section can afford it.  

I hope you all are getting my point, the world class railway stations and trains under private sector will create a demand of world class skilled employees. This will create a large gap between employment opportunities and demand. As discussed earlier a large ratio of government jobs will be lost due to privatization in any sector.  

What about those millions of aspirants who are continuously dedicating their life in preparing for the government jobs? Government has no right to shatter the dreams of youths suddenly in such a way. 

In a nutshell, it can be said that the privatization of railways will bring about the identical results as between government and private schools. Government schools do not have quality education while the fees of private schools is so high that not everyone can pay. 

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