The word privatize first appeared in dictionary in 1983 and was narrowly defined as, “To make private, especially from public to private control or ownership.” It can also be defined as, “Privatization is the act of reducing the role of government, or increasing the role of the private sector, in an activity or in the ownership assets.” Privatization has the following objectives:
i) To improve efficiency and performance by introducing profit oriented decision making process.
ii) To reduce government’s interference and increase the freedom and speed of decision making, government is to govern or to facilitate production of goods and services and should be out of the business.
iii) To promote private sector culture by introducing competition and entrepreneurship.
iv) To reduce government’s fiscal deficit and its external and internal debt.
v) To achieve harmony in the values of political pluralism and decentralization of economic decision making.
Our country has just entered into privatization process. It is necessary to develop the private enterprises in the nation. It helps to the growth of private enterprises in the nation because:
i) It reduces the financial and administrative burden of the government, it means that it generates the environment for the private sector to invest instead of public sectors.
ii) It increases operational efficiency, higher productivity and growth in the production sector.
iii) It encourages private sector and public participation in the industrial development.
iv) It helps to mobilize the resources in the productive sectors.
v) It reduces tax and other charges which may become the main obstacles of the development of private sectors.
vi) It provides business environment for the private sectors.