State the meaning of ‘Privatisation’.

Question :State the meaning of ‘Privatisation’.

The correct answer is -Privatisation is the process of transferring ownership of public assets or services to private ownership and control. In other words, it is the transfer of ownership, management or control of a public sector enterprise or service to a private entity. The aim of privatisation is to improve efficiency, reduce costs, and improve the quality of goods or services provided to the public by subjecting them to market forces.

The process of privatisation can take various forms, such as:

1. Sale of shares to private investors: In this method, shares of a public sector enterprise are sold to private investors, who then become the owners of the enterprise.

2. Asset sale: Under this method, the government sells the assets of a public sector enterprise to a private entity. The private entity then assumes control of the enterprise and its assets.

3. Contracting out: In this method, the government contracts out the provision of a public service to a private entity. The private entity provides the service on behalf of the government, but the government retains control over the service.

Overall, privatisation is a controversial economic policy, as it can have significant social and economic impacts. While it can lead to increased efficiency and reduced costs, it can also result in job losses, reduced access to public services, and decreased government revenue.