Defination: Privatisation refes to any process that reduces the participation of state/public sector in econoimc activities of a country.

Private sector been allowed to play a major role in different types of economic activities. Aspects: (a) Transfer of the government ownership of productive assets to the private sector.It implies denationalisation. (b) Disinvestment:-sale of a part of equity of public sector enterprise to private capital. (c) Entry of private sector industries into the exclusively reserved industries for the public sector. (d) Limiting the scope of public sector and on further expansion of the exisitng public sector. Argument for Privatisation:Poor performance of public sector national economy. of public enterprise:- In view of poor undertakings,public sectro has become a performance burden on the has

Rising budgetary deficits:- budgetary deficits are increasing which further contributes to rising prices. Growing non-developmenatal Expenditure:- non developmental expenditure weakens our financing. High capital-output ratio:- high capital investment but poor output has lead to demand of privatisation Policies: Contracrion of public sector:- list of 18 is reduced to 3(atomic mineral,railway n atomic energy) are reserved sector. Disinvestment:shares among the workers individuals. of and public public sector undrtakings are for greater praticipation 7 & only for public

being sold of private

More institutuional credits:more institutional credit to private sector enterprises from national financial institutions.according to the New Industrial Policy,these financial institutions will not insist for conversion of loans into share capital. Argument against privatisation: Unbalanced growth:Privatisation is no gurantee for social betterment.It results in unbalanced growth of the economy.Public sector is indispensable for the development of all sectors/sections of the economy.

Adverse effects on standard of living:- Privatisation has nothing to do with standard of living of the masses. Less scope for the development of infrastructure:- economic and social infrastructure remains untouched. Growth of state monopoly:- privateisation tampers public sector and prohibits any development . ADVANTAGES OF PRIVATIZATION Increased efficiency Specialization Corruption Accountability Security Goal

DISADVANTAGES OF PRIVATIZATION Short term view Downsizing Political interference Reliability Problems of PSUs 1. Price policy of the Public Sector undertakings. 2. Underutilization of capacity. 3. Problem related to planning and construction of projects 4. Problems of labour, personnel and management 5. Lack of autonomy Other important factors

RBI adopted sharp contractionary measures and had taken huge amounts from International Monetary Fund in July, 1990 and January, 1991 amounting to $2.4 billion. Foreign Exchange Reserves were reduces $ 1 Billion which could support only two weeks imports. Inflation was staring at 14% On July6, 1991 47 tons of gold were transferred from RBI to Bank of England, London. Already 20 tons of gold were sold in International market through State Bank of India