Which of the following statements about privatisation is FALSE?

Question

Question

This question was previously asked in

SSC CPO 2024 Official Paper-I (Held On: 29 Jun, 2024 Shift 1)

Improved performance is one of the advantages of privatisation.
There is no possibility of exploitation of monopoly power by private companies after privatisation.
There was an increase in the cases of disinvestment after the economic reforms of 1991 as compared to the pre-1991 period.
Maruti Udyog Limited was a public sector enterprise before the 1991 economic reforms.

Answer 1

The correct answer is There is no possibility of exploitation of monopoly power by private companies after privatisation.

Key Points

Option 2 is false because privatization can lead to the exploitation of monopoly power by private companies, especially in sectors where competition is limited.
Improved performance is often cited as an advantage of privatization as private companies may operate more efficiently than public sector enterprises.
There was indeed an increase in disinvestment cases after the economic reforms of 1991, aimed at reducing the fiscal burden and improving public sector efficiency.
Maruti Udyog Limited was a public sector enterprise before the 1991 economic reforms, after which it saw significant privatization.

Additional Information

Privatization involves transferring the ownership of businesses from the public sector (government) to the private sector (businesses or private individuals).
The main objectives of privatization include improving efficiency, reducing government debt, and increasing the competitiveness of businesses.
Economic reforms in 1991 in India included liberalization, privatization, and globalization, collectively known as LPG reforms, which aimed to make the Indian economy more market-oriented and expanding the role of private and foreign investment.
While privatization can lead to better management and more efficient use of resources, it can also result in job losses, reduced public accountability, and potential exploitation in the absence of adequate regulatory frameworks.