July 13, 2014

Privatization a Blessing or a Menace

Privatization a Blessing or a Menace

English Essay on "Privatization a Blessing or a Menace"

The process of giving the nationalized institutions to the private sector is known as privatization. The privatization programme in Pakistan was launched in 1991 in order to curtail the government’s role in commercial activities. Successive governments have attached high priority to the privatization as the central core of their commercial policies for restructuring and revitalizing the economy. 146 units had been privatized with gross proceeds of Rs. 184.6 billions in 2006.
The Nationalization Theory had been persuaded as a vital device of rapid economic development and an effective policy-instrument to break the vicious circles of poverty and backwardness of under developing countries during 1980.
The implementation of privatization policy in Pakistan is not a new economic development approach. In the first announced industrial policy, most spares of investment were kept open for the private sector. However, since the beginning of 1990s a comprehensive programme of privatization of major nationalized industries, financial institutions and utilities has been started.(4essay.blogspot.com) A high level privatization commission was set up in January, 1991 to formulate recommendations for divestiture. Besides this, laws were also amended to facilitate privatization and the process has been provided legal cover against reversal under the protection of Economic Reforms Ordinance 1991. The process of privatization has many economic benefits therefore the process of privatization is being adopted in different countries. The main purposes and objectives of the process of privatization can be described as following.
  1. The process of privatization is helpful in stabilizing the economy through enhancing the volume of exports.
  2. The process of privatization provides help in improving the balance of payments.
  3. Privatization is also helpful in maintaining the unbearable burden of foreign loans.
  4. The process of privatization is a source of improving annual deficit budgeting.
  5. The process of privatization is helpful in acquiring latest technology and also helpful for technical training of the workers.
  6. The process of privatization is helpful in acquiring the sources which give support in the development of natural sources.
  7. The process of privatization help in improving the level of saving and it is also helpful in increasing the rate of investment.
  8. The process of privatization helps in reducing the effects of bureaucracy and it makes the industrial sector more efficient.
The process of privatization helps in increasing the efficiency of the industrial sector, for the private entrepreneurs have to work in a very tough competitive environment where usually the principle of “survival of fittest” prevails which forces to exploit productive resources at their fullest. The process of privatization helps in minimizing all those administrative and managerial shortcomings frequently committed by public sector personnel. The process of privatization helps in maintaining attractive foreign capital and latest technology, it provides help in training technically and produces well informed expertise. it provides help in reducing the volume of non-development expenditure being suffered in just maintaining sick as well as inefficient industrial units. ft provides help to get rid of unbearable and ever increasing burden of foreign indebtedness by improving the productivity of various sectors. The process of privatization helps in broaden the narrow base of share capital by providing incentives to local as well as foreign private investors.
The process of privatization is also helpful in minimizing the political pressure from commercial banks, development institutions and productive institutions, it also provides help in discouraging smuggling and black-money activities. The process of privatization where has a lot of advantages, it has also some disadvantages or demerits. The privatization policy of the government may cause to decrease the government income because of tax avoidance tendency. National security and autonomy may be in danger in the absence of an active government. The concentration of national wealth in few hands may rake a place along with all its bad effects. Due to the privatization, the concept of welfare state may be jeopardized. The process of privatization would indeed lead to boosting industrialization in the country but its success highly depends upon the implementation of its some very important aspects. The process of privatization in Pakistan like under-developing country, where dirty politics has its deep-rooted effects is not a simple matter. The process of privatization can only work smoothly if all potential components the governments the company going to be privatized, the investors particularly foreign investors, the employees and the public are fully aware of the rules. The government should explain clearly the objectives and procedure of the process of privatization. If the process of privatization is done with specific system of control and balance and with clear objectives and rules, it would be beneficial for the economic development of a country.

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