Privatization in India
In 1991 India made some major policy changes in their economic ideologies. There were stagnation and slow growth in the economy.
To tackle these problems the, then Finance Minister Dr. Manmohan Singh introduced some major economic reforms. Now, we call it the liberalization of the Indian Economy and the LPG reforms.
Privatization has a very broad meaning in economics. Everything that ranges from the introduction of private capital to selling government-owned assets to transitioning to a private economy.
As the definition of privatization is so very diverse let us take a look at the three main features of privatization.
Ownership Measures: The ownership of all public enterprises ultimately shifts to private owners. The denationalization can be complete or partial.
Organizational Measures: This is where we limit the control of the state in public companies. Some methods include holding company structuring, leasing. restructuring of the enterprises etc.
Operational Measures: Public organizations and companies were running into huge losses. So the efficiency of these companies was to be increased.
Conceptualization of Privatization in India
1] Delegation: Here via a contract or franchise or lease or grant etc. the government keeps the ownership and the responsibility of an enterprise.
But the private company will handle the daily activities and deliver the product or service. The state will remain an active participant in this process.
2] Divestment: The government will sell a majority stake of the enterprise to one or more private companies. It may keep some ownership but will be a minority stakeholder in the enterprise.
3] Displacement: The first step here will be deregulation. This will allow private players to enter the market. And slowly and gradually the private company will displace the public enterprise.
Sia ? 3 years, 4 months ago
Privatization in India
In 1991 India made some major policy changes in their economic ideologies. There were stagnation and slow growth in the economy.
To tackle these problems the, then Finance Minister Dr. Manmohan Singh introduced some major economic reforms. Now, we call it the liberalization of the Indian Economy and the LPG reforms.
Privatization has a very broad meaning in economics. Everything that ranges from the introduction of private capital to selling government-owned assets to transitioning to a private economy.
As the definition of privatization is so very diverse let us take a look at the three main features of privatization.
Ownership Measures: The ownership of all public enterprises ultimately shifts to private owners. The denationalization can be complete or partial.
Organizational Measures: This is where we limit the control of the state in public companies. Some methods include holding company structuring, leasing. restructuring of the enterprises etc.
Operational Measures: Public organizations and companies were running into huge losses. So the efficiency of these companies was to be increased.
Conceptualization of Privatization in India
1] Delegation: Here via a contract or franchise or lease or grant etc. the government keeps the ownership and the responsibility of an enterprise.
But the private company will handle the daily activities and deliver the product or service. The state will remain an active participant in this process.
2] Divestment: The government will sell a majority stake of the enterprise to one or more private companies. It may keep some ownership but will be a minority stakeholder in the enterprise.
3] Displacement: The first step here will be deregulation. This will allow private players to enter the market. And slowly and gradually the private company will displace the public enterprise.
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