q why privatization of public sector undertakings


Q. Why Privatization of Public Sector Undertakings are requied?

The private sector was allowed to set up business with government control over their functioning. There was however, a extraordinary growth of public sector undertakings, thinking that it would ensure the achievement of socialistic pattern of society. With the passage of time, though, nepotism, corruption took hold of the public sector undertakings. Instead of contributing to economic growth, these public sector undertakings became a responsibility for the government. Recent years have taken a total about turn and privatization is looked upon as the panacea. Public sector, envision as a catalyst in the economic growth of the country, steadily turned into a perennial loss-maker and a big liability. In 1990-91, of the 244 major business enterprises, only half showed any profits and that too before taxes. Ninety units incurred losses. There have been other factors which have undermined the utility of the public sector units in our country. There has been a continuous increase of budgetary deficit which has taken to inflation. Non-plan, non-development government expenditure is also increasing. Since public sector undertakings contribution to such expenditure is considerable, it is being suggested that they should be handover to the private sector.

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