DISINVESTMENT / PRIVATISATION - A GOOD STEP OR A FUTILE EFFORT

 DISINVESTMENT / PRIVATISATION 

Starting with the term itself , so is privatisation new to us 

A straigion ht forward answer will be NO 

first of all don't get away with its name 'PRIVATISATION' doesn't mean that every govt asset will be sold away nd the country will be run by industrialists and corporates 

let's go back from where it started ,  the origin of disinvestment and privatisation

after independence india was suffering with economic crisis 

the idea of economy at that time was based on socialism completely 

Govt. did take over companys set up by private firms which later became PSUs ( public sector undertakings) because govt. wanted control over production 

now wht happened in late 1980s was that soviet union collapsed and so did the idea of socialism 

china revolutionised the country with new economic reforms based on capitalist idea (we will get to it ahead) or in simple terms we can say towards market based economy 

now the idea of socialism did collapsed completely when indira gandhi became p.m nd came out with 6th five year plan which was based on market economy 

the country did realise that if they have to use the products with full potential they need to be upgraded nd govt. alone can't do everything

WHY GOVT SUPPORT PRIVATISATION

To understand this we should know about how it works

Govt. for its revenues rely on taxes nd whenever the expenditure become greater then the revenues the term used is 'FISCAL DEFICIT'

now to overcome this govt. can do 2 things 

-either cut the expenditure 

-or increase the revenue 

now to overcome fiscal deficit govt sell some of its PSUs to cut the expenditure nd also revenue is increased 

the money goes into ( NATIONAL INVESTMENT FUND)

thts how it works 

now i'll name some PSUs running in loss due to there outdated technology nd poor efficiency , now for increasing production govt. can either upgrade them or give them to private players

Upgrading would obviously cost much so govt. just sell them in parts or sometime complete of it 

1) SAIL

2)HINDUSTAN PETROLEUM

3)ONGC

4)CONCOR

5)AIR INDIA 

6)BSNL

7)BHEL 

the origin of privatisation as discussed above was in early 1990s with LPG model of govt. ( liberalisation , globalisation , privatisation )

NEED OF PRIVATISATION 

In a nutshell we can say india wants to achieve capitalist economy 

the core of capitalist economy is capital means money 

in capitalist economy govt. does not produce it just administer and regulate 

now benifits or objectives of disinvestment are as follows 

1) TO MEET BUDGETERY NEEDS - to overcome fiscal deficit 

2) RAISE FUNDS TO UPGRADE TECHNOLOGIES

3)INTRODUCE COMPETITION AMONG PRIVATE FIRMS- because when two firms compete public gets the best product 

4)TO AVOID MONETARY LIABILITIES - the perks given to employes other thn basic pay

NEUTRAL VIEW ON PRIVATISATION 

Disinvestment opens the ground for private players who have capital (money) , thts actually good because this is how we can use the resources to full potential 

moreover in a capitalist economy govt does not produce it just administer and regulates 

now govt. is elected for 5 years so it is temporary 

while 

ECONOMY

INSTITUTIONS

DEVELOPMENT PLANS  

are permanent and should not change acc. to party in power everytime 

we have many examples of countries with capitalist economy which are developed nd superpowers 

U.S is one of  the great examples

IS IT GOING FINE OR THE IDEAS HAVE A DIFFERENT SIDE ALSO 

Now there is a term known as STRATEGIC DISINVESTMENT which means first checking thn analyzing nd thn making disinvestments keeping mind wheather the PSUs is making profit or loss or can it be upgraded acc to needs 

it is understood when govt privatise comapnies which are running in high debts 

but when  MAHARATNA companies like 

SAIL

HP

ONGC

nd  NAVRATANA companies like 

INDIAN RAILWAYS  

BHEL 

CONCOR

are privatised 

we can understand tht regardless of a company making profit or loss it is being privatised which means 

no matter wht govt. just want to get out of buisness anyhow

CONCLUSION / A GOOD WAY TO GO TOWARDS CAPITALISM

A good way to go towards capitalism is govt. should own 2,3 PSUs nd make them capable to stand 

like banks 

network operaters 

petroleum agencies 

nd many other core departments 

thts all , i tried my best to go completely neutral with critics nd reality , facts 

suggestions and add-ons are warmly welocmed 

THANKYOU !!!