Privatization Private Sector

1. INTRODUCTION Since independence, Government of India followed a policy of socialistic pattern of society in the mixed economy framework. Both public sector and private sector exists side by side. Along with private sector, public sector also got due importance. Important and strategic sectors of the economy left only to the public sector. Government is not allowed private firms to invest in these sectors. Insurance sector is also under the control of the government during these days. At that time India heavily borrowed from IMF and World Bank. Government depends on these agencies for financial aid. Gradually in 1990’s India slowly move towards the introduction of new economic policy that is privatization, globalization and liberalization.

This is aimed at bringing about greater efficiency by increasing productivity and reducing transaction costs. Competition will bring a wider choice of products at lower price. Besides larger coverage of population, better customer services, better use of information technology and better returns to the policy holders, leading to the increase in the awareness and spread of insurance.
2. MEANING OF PRIVATISATION In broader sense, the term privatization indicates to include and enlarge the share of private sector in the production of goods and services and fewer control and regulation by the state in the economic activities (Paul Starr). It is a policy change and process that creates major institutional and structural changes in different segments of our society. Privatisation means allowing the private sector to setup more and more of industries that were previously reserved for public sector alone. The degree of privatization judged by the extent of ownership transferred from public sector to private sector. Privatisation is the transfer of property or responsibility from the public sector to the private sector. It is the process or activities of enterprise that were once performed and operated by the public sector are performed, managed and owned by private business enterprises or

The process of privatization leads to cutting of some essential services which have been efficiently provided by the public sector. Privatisation leads to private monopoly, if there is no government control. It further leads to reduced government revenue and concentration of economic power in the hands of a few people. Moreover, the performance of a sector depends upon several factors. Change in ownership right is the only one thing that determines the performance of the sector. It is important that no theory or empirical evidences that do not prove that privatization leads to improved