Why might Privatisation result in Better Efficiency as well benefit to economy

Why might Privatisation result in Better Efficiency as well benefit to economy

Privatisation  can mean different things including moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when a heavily regulated private company or industry becomes less regulated.

In simple terms, privatisation for a company is when a Government company is handed over on lease for a some time to a private company where they become the owners responsible for handling and managing the company that was previously manged by the Government directly.

Also read our previous post shared below

Past Scenario before Privatisation

Before starting to talk about privatisation, let we talk about what is the past scenario. So.
In any country there are two types of organisations or we say sectors based on division.

  1. Public Sector controlled by the government
  2. Private Sector controlled by individual or a group of individuals

So, you must be thinking why these two, what is the benefit of this. So, we let go back to the old British colonial times. When British came in the name of business, they started capturing and controlling small districts or lands owned by landlords, leading to control over the country. So after the country’s independence. Some sectors having large scale nationwide public use and need, like electricity control, railways, bus transport all came under the public sector.
Along with some other industries also.

And the small companies or private owned businesses came under the private sector. Like shops, industries, or it companies. They are managed by the private organisations, under one person or a group of person.

Let us see some differences in both sector

Public SectorPrivate Sector
1. Owned by the government1. Owned by private organisations
2. Nationwide spread2. May or may be nationwide, generally limited to city
3. Revenue generated goes to current government3. Revenue generated goes to the organisation running
4. SC/ST quota preferred for getting jobs over qualification4. No SC/ST quota for getting jobs only qualifications matter
5. Promotions based on Quotas5. Promotions based on Performance
6. Job security whether he performs or not6. No job security if he performs bad
7. May get government perks7. No government like perks
8. Have political influence in jobs8. No political influence in jobs
9. Hard to get a job9. Easier than government to get a job
10. Less growth opportnities10. more growth opportunities
11. Decision making in hand of current ruling party, so there may clash and delays in the process11. Decision making in hands of individual or group, so process is faster
12. Affected by reservation and other policies that may change12. No reservation and policies affecting.
Comparison public VS Private Sector

Current Scenario With Privatisation

So, now a days getting news of like privatisation of banks, railways, airlines by government. People are like getting crazy over this news. People are having more fear than being happy, of losing jobs , not getting jobs. Some fears may be genuine, some may be just a drama. So will actually privatisation result in better efficiency. Let see, how and why. As we already mentioned the differences, yo may have already figured out, what it can be.

So, let see Cons in current Public Sector

  1. As having reservation the biggest concern, most of the vacancies are filled by a fixed percentage of SC/ST candidates who are given an advantage by having fewer scores for getting qualified for a job. Because of this let say a candidate scored, 90 marks but in general, may not get a job, but a candidate from SC who got 40 marks may get a job. So SC/ST candidates are preferred over general candidates. Most of the general candidates facing this issue does not apply for the jobs, resulting in government vacancies filled up mostly because of reservation.
    We are not meant by saying this, that all SC/ST candidates are bad, some may be good too. But most of them are. Personally saying from my experience in college, the general category struggle more in terms of money spending and learning, than SC who got the advantage of scholarships, and other advantages based on their Caste.
    So ultimately, this reservation leads to low-quality employment, in the public sector. Along with job security most of them do not do work efficiently. This results in loss of work as the performance of that specific department. mostly we see in movies/series, files stacked up eating dust as they are not looked up. That is the harsh reality of the public sector.
  2. Political Influence is another issue like most of the vacancies in some places gets filled with reference to a political person. So sometimes, even without an open vacancy they get employed, also no one is able to question it because of the influence of the person, who helped in getting a job. Some may work goo with all their ability, but some just go and take salaries at the end of the month for just taking salaries. Believe me, there are many cases, where people are employed but do not do any work, not even going office they just go to collect salaries. They may visit when there is an official check going on. This has improved much with the coming of the fingerprint sensor based attendance system, but still has a way to go.
  3. Corruption in the public sector is another reason. It is not like that private companies do not have corrupt people, they have but a small scale. Like take an example of the public sectors, for even getting a file to be passed, we have to give bribe under the table. Let say some departments are clean in that way, but there be corruption in another form.
    Like wrong bills, wrong records, and data, leading to these money scams on large scale, when they are detected at some point. Then inquiries may be set up, later to be suppressed by political influence as most of the time political parties are involved.
  4. Another reason is like job security leading to less performance. as we may know, public sector jobs have job security, so performance not matter that much. It primarily depends on the person if he does the job with full effort or less effort.

These are some of the cons. Also you may be asking why, we only talking in negative terms, like we are against public sector. We are not against, as there may be people, who may get job because of these factors, but are giving more effort than possible for doing the work. But number of such people is less, and mostly are forced not to do work until ordered by higher authorities(Corrupt authorities). As you have heard of the quote,

One dirty fish makes the whole pond dirty.

so same is for public sector, because of some corrupt people the whole system suffers.

All these cons mentioned not exists in public sector, so we will not list.

So How Privatisation result in Better Efficiency and will help

As the private sector does not have the listed cons, there will be more effieciency as :

  1. No reservation only qualified candidates will be given job opportunities. it will not matter if a candidate comes from general or SC/ST, but only his work and knowledge. Irrespective of his caste, he will grow with his work and efforts for getting more opportunities.
  2. Less corruption, as private sector will have more control by group or individuals, as they will be only responsible for managing the work.
  3. Advance Technologies and new working practices, will be introduced by private companies faster, that may not be introduced by government faster.
  4. employees will be responsible and questioned on the poor performance and may be replaced if he not perform, which may not be the case in public sector.
  5. Equal growth and work opportunities to everyone, leading a good work ecosystem and attracting interest of more candidates towards this sector.
  6. Better services to public with modern and new practices.
  7. Government may also gets revenue, without actually monitoring and working, so more the sector grows, more revenue to the government. No more losses to be beard by the government anymore, which is recovered y only us the public, in form of increased taxes, bu with same services.
  8. As public sector controlled by private companies, so similar and better services will be available like other private sectors we got. People will use more, the public sector services, resulting in more revenue and lesser losses.
  9. Maintenance and repair activities will be faster, as government activities may be delayed by tenders and contracts process. The same process is in private sector of tenders and contracts, but faster than government and free from corruption as well political influence, like the company offering better services in lesser price may get contract over a referred company by someone with higher costs and poor service.

Final Thoughts on Privatisation benefit to economy

We are not completely against public sector, nor we support any political party’s decision. We have just shared what we think of from our perspective of what we observed. We are just Indians, who love our country and want to dedicate our part towards the country. We just want to let people know of things, that they may not know. Also, news media have become worse, they may show modified things to get higher TRP so do your on research and then decide what actually is good, for the country and people.


So this is all for today, hope you like the article. Feel free to share your views in the comments below. Let us know if we may have written something wrong. Do share as much you ca so people can know about this. Keep connected and coming back for more awesome posts like this. Thanks and have a happy reading.


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