Name the various forms of Privatization and which form of privatization can be more acceptable to the people.
Privatization refers to any process that reduces the involvement of state/public sector in economic activities, of a nation. In a narrow sense privatization refers to the induction of private ownership in a public sector undertaking. In a broader sense, it implies the enlargement of the scope of the private sector in’ the growth of the economy. Privatization in the narrow sense can take the following forms:
This implies complete transfer of ownership of a public enterprise to private hands. Some examples of total de-nationalization are : Allwyn Nissan-was handed over to Mahindra, Manfalore Chemical and Fertilizers to LAB Group and Maharashtra. scooters to Bajaj Auto (India).
Joint Venture :
This implies partial induction of private ownership from 25 to 50 per cent or even more in a public sector enterprise depending upon the nature of the enterprise and state policy in this’ regard.
Transfer of ownership of a loss-making concern to the workers is another form of privatization. The ‘basic logic of the proposal is that workers besides receiving wages for work, would also be entitled to a share in ownership dividend. Since workers’ personal interest is linked to the interest of the enterprise, the workers are likely to work hard to increase productivity so that they can earn more. Such schemes were introduced in Kamani Tubes, Central Jute and Mewar textiles, etc.
The sale of 5 per cent to 10 per cent shares of a profit-making public sector enterprise in the market is known token privatization. The objective of such privatization is to obtain revenue to reduce budget deficit.
Out of the various forms of privatization, the most acceptable is the joint venture in which the share of the private sector is kept at either 49 per cent or 74 per cent. But simply a change of ownership is not sufficient to increase productivity and profitability. For this purpose, other measures like linking wages to productivity, changing promotion policy based on the efficiency of the workers is needed so that a competitive environment is created in which efficiency pricing becomes a norm.