Question

Mention three arguments in favour of and against lpg

Answer 1

Neo-liberal economic theories recommend privatisation as it aims at increasing efficiency, output and profitability as compared to the situation of state-owned enterprises.

Thus, the arguments for privatisation are based on the economic grounds and poor performance of PSEs. In this section, we will put forward economic arguments in favour of privatisation of PSEs.Neo-liberal economic theories recommend privatisation as it aims at increasing efficiency, output and profitability as compared to the situation of state-owned enterprises.

Thus, the arguments for privatisation are based on the economic grounds and poor performance of PSEs. In this section, we will put forward economic arguments in favour of privatisation of PSEs.Further, accountability of these enterprises is minimal and no one is held responsible for the ineffective functioning of these enterprises. Political interference also has a telling effect on the performance of the PSEs. Most PSEs operate with manager having less or no expertise on the affairs of the concern. Decision-making again is a lengthy process. In fact, managerial inefficiency is one of the greatest banes of the PSEs.

As a result of all these, PSEs chronically suffer from losses leading to a drainage of state resources. Most of the public sector undertakings fail to generate revenues. On the other hand, subsidies and grants are often given to these enterprises. In other words, PSEs in India— instead of generating revenues—have become white elephants—’a monumental waste and liability for taxpayers’.

Against such a backdrop, it was argued in 1991 by some people that high-cost uncom­petitive PSEs of India would not be able to compete with the globalised world. Under the circumstances, privatisation is the best answer to the ills of PSEs. If the private sector is al­lowed to grow and function in a liberalised economy, the benefits of efficiency in terms of resource allocation could be reaped.