Question

Is privatisation of profit making public sector enterprise .analysed?

Answer 1

At independence, India adopted a mixed economy model. In this context, the Public Sector Enterprises (PSEs) were established on a socialistic pattern of development.

Apart from that, there was a need to create adequate infrastructural facilities which served as the most important consideration leading to the expansion of the PSEs.

However, due to the poor performance of several PSEs and the consequent huge fiscal deficits, the issue of privatisation has come to the forefront. Privatisation is ought to infuse efficiency by bringing PSEs to the competition in the market.

The term ‘privatisation’ is used in different ways, ranging from ‘transition to private legal forms’ to ‘partial or complete denationalization of assets.’ In India, privatisation is sought to be achieved through two measures:

The disinvestment of the government’s equity in public sector undertakings.

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Answer 2

Explanation:

Indian Economy

Privatisation of PSEs

01 Jan 2020 7 min read

Tags: GS Paper - 3Mobilization of ResourcesGovernment Budgeting

This article is based on “Weighing in on the public sector privatisation debate” which was published in The Hindu on 01/01/2020. It talks about issues related to the privatisation of Public Sector Enterprises (PSEs) in India.

At independence, India adopted a mixed economy model. In this context, the Public Sector Enterprises (PSEs) were established on a socialistic pattern of development.

Apart from that, there was a need to create adequate infrastructural facilities which served as the most important consideration leading to the expansion of the PSEs.

However, due to the poor performance of several PSEs and the consequent huge fiscal deficits, the issue of privatisation has come to the forefront. Privatisation is ought to infuse efficiency by bringing PSEs to the competition in the market.

The term ‘privatisation’ is used in different ways, ranging from ‘transition to private legal forms’ to ‘partial or complete denationalization of assets'.

Hope this helps mate.