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By-Aniruddha Tulaskar , Roll. 57
In India, Public Sector Undertaking (PSU) is a term used for a government-owned corporation. Where management control of the company rests with the Government; it can be Central Government or the State Governments. Privatization means transferring the control of an enterprise from the government sector to the private sector.
5 Major Arguments in support of privatization of PSU’s In India:
1. To promote increased efficiency.
The need to promote efficiency in running commercial organizations has arguably been the dominant motivation. There is a sense that public ownership somehow leads to lower levels of efficiency than are possible under private ownership. 2. Stops loss-making PSUs from adding to government debt. Thus gives new owners a strong incentive to turn around failing PSUs into successful businesses. 3. To reduce government interference in the economy and promote greater private initiative. Depoliticizes PSUs, remove governmental pressures for over-manning and the sub-optimal use of resources; 4. To promote wider share ownership development of the capital market. and the
Gives new businesses access to investment capital that government cannot provide 5. Expands an enterprise and an industry, in the long run creating more jobs and generating wealth for the country.