Is privatization of airports, Railways and other government services in India a good move? What are the advantages and disadvantages? (Suggests some points)

Dear student,

Privatisation means transfer of ownership of  companies, such as railways, airports etc. that are owned by the government, to the private sector. It can be permanent or on lease for a stipulated period of time.  It is believed that the people employed in the private sector work more efficiently. However, on the other hand private firms who have monopoly can charge exuberant amount from their customers.

Advantages:

• Private firms work for profits. They cut their costs and work more efficiently. 
• There is an argument that most of the decisions have political influence in government sector. However in the private sector due to lack of political interference efficient decisions can be taken. For example the government cannot remove workers which are inefficient fearing it may lead to negativity among the people for the government.
• Most of the decision of the government are based in terms of next elections. However in private sector decisions are made to increase efficiency and profitability.
• As private firms work under pressure from the shareholders they work efficiently. Government owned companies have no such pressure so it is easier for them to be inefficient.
• Profit and competition are the greatest motivators for any private company. These are lacking in government organisations.

Disadvantages:

• If there is only one private firm in the market, the firm can seek higher rates and exploit the customer.
• Public interest is sidelined by the private firms. They are more interested in profits rather than public welfare.
• The private companies use their monopoly powers to get higher profits. These companies should be regulated by the government to control abuse of monopoly power. 

India has a mixed economy. Both Private and Public Sectors play an important role. Most economist believe that privatisation could help in speeding up economic growth. Privatisation in India can reduce costs, increase quality and curb public spendings. Privatisation in India would bring innovativeness and creativity in the government sector.

Regards