Public Sector Undertakings should be privatized.

Those public sector undertakings which are making profits should be privatised. Do you agree with this view? Why?

Answer:

Nearly 55% of the value added in the organised sector in India is with the public sector. The government controls nearly 72% of financial institutions such as banking and insurance, 81% of oil production and distribution and 32% of production of the non-oil, non-finance sector companies. Many of these public sector units have become chronically sick and thus cause a huge drain on the exchequer, they also keep resources locked, preventing these from being put to productive use. Hence loss making sick PSUs should be privatised instead of wasting resources in trying to revive them.

On the other hand, the profit making PSUs should not be privatised only for drawing out funds to cover the deficit in government budget. A profit-making PSU should be privatised only if it can earn better revenues and thus higher profit if run more efficiently by the private sector. Privatisation may cause exploitation of workers in these units and also may have socially undesirable effects such as concentration of economic power. Government has therefore declared recently that it may further dilute its stake in profit-making Public Sector Undertakings (PSUs), but will not privatize them.