Privatization: Meaning, Advantages and Disadvantages

After independence, India is famous for its Non-Alignment Movement. We did not gather the courage to interfere in worldly affairs and remain neutral. This conservatism is causing a slow down in the economy. Then during the 1990s when India adopted Liberalization, Privatization, and globalization, popularly known as LPG policy, it started surpassing in many sectors.

We can define it as backing out the government from its role and giving power to markets. Sometimes it is regarded as a transfer of ownership of government firms, assets, or companies to private firms. These days the word privatization is replaced by ‘disinvestment’ due to many reasons. Disinvestment is defined as taking back the prior investments by selling them. Even many other countries use separate terms for privatization like Australia – prioritization, Thailand – Transformation, etc.


Taking care of local people government protects this practice as important and in need of time. Private owners are always more skillful and efficient due to profit gain motive. They are improving their performance every day in providing quality products. They are free from political interventions and unnecessary evils like black marketing, adulterations, etc. It is very significant for both the consumer and producer section both. Development and growth are always the focus points of privatization, for example, we can see developed countries like the United States have 90% of their economy in private hands.


Privatization always creates issues in a country like India where the majority of people work in the unorganized sector. The problems on the ground that are indeed the real problems of India are not taken into account during such steps. Privatization gives profit maximization agenda to the owners of the firms. It is creating private even over necessity goods that would exploit consumers. Areas like health, education, transport are the primary demands of every individual. The backing out of government from these sectors is considered as the biggest hurdle in social development. There is no welfare promotion by private firms and the poor section is getting more vulnerable every day.

Case Study:

With slogans like “Padhega India Tabhi To Badhega India” every government steps into power. But at the same time, privatization of formal education is getting pace. Government schools are not efficient and thus losing priority. Undoubtedly, benefits like quality education, modern ways of teaching, proper infrastructure, etc. are provided through private schools. But there are many challenges. Poor and the middle-class section of the society is not getting this benefit due to large money donations for education. Standard of government school is declined and study pattern is so traditional. Teachers are mostly absent and not accountable. Government schemes are not able to stand between the needs of the majority part of the population. Even institutions like IIT, IIM are also taking huge fees. The share of scheduled caste and the scheduled tribe is low here. Privatization is education is a boon for only a certain section of India.


The private sector is very essential for the growth of any country. Privatization is a beneficial policy only when the majority of the population is availing advantages especially poor sections. Otherwise, the GDP rates go up but with unequal shares among people. The government approach should always stand to bridge the gap between poor and rich.

Share on:

A drop of ink may make millions think. With this spirit, I chose to write for my passion. I am a student studying BA Programme at Miranda House, DU. My core areas are Economics and Political Science. My interests are reading and writing in various fields especially geopolitical issues, International Relations, Social Issues, etc. I will go for UPSC to administer people using my skills and aptitudes. Writing always elevates our creativity and imagination power.