Give two reasons in favour of privatisation of public sector enterprises.
Arguments in favour of privatisation:
1. Greater flexibility in making decisions: Sometimes PSUs suffer losses just due to inadequate autonomy in the 'decision making power' of the management. If the PSUs are privatised, then the production and investment decisions of the management would be free from any government intervention, and they would be purely guided by profit motive.
2. Improvement in Managerial Efficiency: Privatisation is a means of improvement in managerial efficiency because the private sector is almost free from political interference.
When many areas of industrial production are opened up for the private sector enterprises, then their investment in the industrial sector is expected to increase to a large extent. Higher investment would mean creation of greater employment and income opportunities within the economy.
Arguments in favour of privatisation:
1. Greater flexibility in making decisions: Sometimes PSUs suffer losses just due to inadequate autonomy in the 'decision making power' of the management. If the PSUs are privatised, then the production and investment decisions of the management would be free from any government intervention, and they would be purely guided by profit motive.
2. Improvement in Managerial Efficiency: Privatisation is a means of improvement in managerial efficiency because the private sector is almost free from political interference.
When many areas of industrial production are opened up for the private sector enterprises, then their investment in the industrial sector is expected to increase to a large extent. Higher investment would mean creation of greater employment and income opportunities within the economy.
