Define ‘privatization’ as per the 1991 economic reforms and name any two public sector undertakings that were privatized after 1991. Discuss the impact of privatization on efficiency and service delivery.
Answer
Privatization refers to transferring ownership of public sector undertakings to private investors, aiming to improve efficiency, reduce fiscal burden and enhance service quality. Examples include Indian Airlines and NTPC. The reforms led to higher productivity, better managerial practices and improved customer service, though some sectors faced job losses and service disruptions.
Step-by-step solution
- Define privatization: the process of transferring ownership from the state to private investors.
- Mention the goal: improve efficiency, reduce fiscal burden and enhance service quality.
- Identify two PSUs privatized after 1991: Indian Airlines and NTPC.
- Explain efficiency gains: better cost control, competitive incentive and faster decision‑making.
- Describe service delivery improvements: higher quality, more product variety and customer‑focused approach.
- Note challenges: job losses, equity concerns and the need for regulatory oversight.
Common mistake: Confusing privatization with disinvestment or public sector reforms
Concept tested: Privatization impact on efficiency
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