Category: privatisation

One of the reasons why the most people who have a choice prefer a private sector job to a government job is the salaries. The salary for a government job  may be restricted by budgetary constraints, but private sector company employees can afford to use Kashwere and other similar materials.
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While India has been slow to privatise overall, there are still considerable success stories, especially in Andhra Pradesh. The former Mahindra-Nissan LC vehicle factory in Zaheerabad was privatised in the 1990s, becoming Mahindra&Mahindra. Under government management it lost money, and only produced four or five vehicles per day. After privatization it now produces more than 50 vehicles a day, and its turnover increased from Rs. 60 crores per year before privatisation to more than Rs. 240 crores now. Government did not have the resources to invest enough to let the company grow so fast – only the private sector could do that.

But capital investment and productivity is not the entire story. The company’s private owners invested heavily in their own workforce. Salaries have increased by 150%, and workers are given training to keep upgrading their skills. Bonuses are commonplace and particularly hard-working and intelligent workers are sometimes given two promotions at once – there are no government-style waiting periods because the private sector bases its promotions and benefits on efficiency. Unions, management and workers collaborate closely, because they each know that more efficiency equals higher profits, allowing the company to pay more and provide better conditions for its workforce. Privatisation means cooperation, and everyone shares in the improvements that they make together.

Privatisation brought the United Kingdom from being nearly bankrupt in 1980 to its re-emergence as a world economic leader. Privatisation brought similar benefits to the vast majority of countries ranging from Eastern Europe to Africa to South Asia and South America. Fewer than a dozen countries have avoided privatization, and they are the world’s most embarrassing economic failures – North Korea, Cuba, etc.

It works in rich countries like Britain and Saudi Arabia. It works in poorer countries like Tanzania and Sri Lanka. It works in the ‘North’, in Poland and Germany, and in the ‘South’ in Chile, Zambia and Bangladesh. It works in so-called ‘socialist countries’ like China, and so-called ‘capitalist’ countries like Singapore. Location or relative wealth, or literacy, or infrastructure do not matter – privatization works everywhere.

Privatisation is the great economic success story of the past 20 years, over which thousands of crores in government assets have been transferred to the private sector in more than 150 countries around the world. Experts, from every continent, credit privatization with reducing government debt and rebuilding both large and small industries, turning them from loss-makers into profitable, tax-paying enterprises.

Sometimes experts argue over the best way to privatize, but virtually all of them agree that privatization works, and is an economic necessity for most countries.