Impact of Privatization on Indian Economy

Abstract

When the government sells a government department or entity to a private investor or increases the share of private investor above 50%, then this process is called privatization. In privatization the government's stake in a particular industry is reduced or eliminated. In an industry that involves both government and private investors, losses and profits are shared between the government and private investors. Most of the government decides to privatize those industries which are running in loss. Next we will discuss the advantages and disadvantages of privatization in detail. "While the case for economic reforms may take good note of the diagnosis that India has too much government interference in some fields, it ignores the fact that India also has insufficient and ineffective government activity in many other fields, including basic education, health care, social security, land reforms and the promotion of social change. This inertia, too, contributes to the persistence of widespread deprivation, economic stagnation and social inequity." - By Dr Amartya Sen & Jean Dreze.