Positive and Negative Effects of Privatization
Privatization has created quite a positive impact on the world. Firstly, it has condensed the government debts. Furthermore, the quality of services has improved by a great margin. Moreover, there are now new products that are entering the market on a daily basis to help people get innovative goods. Due to the ever-growing competition in the industry, everyone is trying to make the most out of their goods.
While privatization has numerous benefits, it also has a fair amount of drawbacks. The first one being the drop in the quality of goods as they mainly aim to make a profit. In addition, there is also the drawback of the rise in prices. Similarly, this also gives rise to the rise in corruption. There is a rise in the prices and the customers have no choice but to pay the same. Other than that, privatization has also caused uncertainty amongst the consumers.
Positive Effects of Privatization – Here is a look at the positive effect of privatization:
Reduced Government Debts – It has lessened the burden of the government. One of the major positive impacts that privatization has had is that it has reduced the government’s debts.
Improved Services – The service provided to the customers has improved a great deal owing to the competition among the private sector owners. As there is increasing competition in the private sector, everyone is competing to give their best.
New Kind of Products – This helps in mixing creativity with private making and it also benefits the consumers greatly. In order to stay ahead of the competition, private organizations try to come up with new and innovative products to meet the growing demands of the customers and create a foothold in the market.
No Political Interference – Political interference in various sectors has stopped which is a great sigh of relief. With the shift from the public sector to the private sector, the interference of the political parties has been stopped in various industries.
Competitive Rates – In the industries where the competition is high, the customers get the advantage of getting better services at lesser rates. In order to do that, they offer competitive rates so that everyone can benefit. In an attempt to increase their sales, the private owners provide goods and services at competitive rates.
Negative Effects of Privatization – Here are the negative effects of privatization:
Profit Making – The sole aim of the private owners is to make a profit and they try to attain it at any cost be it compromising the quality of the product, playing with the customer’s emotions or adopting other unfair means. So just to gain maximum profit, they compromise the quality and opt for unfair means.
Price Rise – In sectors, where there is less competition or monopoly of a private owner, the consumers need to shell a huge amount of money to buy goods and services.
Rise in Corruption – Private owners adopt various means to get their tasks accomplished. There are more and more cases of bribery, fraud, and others on a daily basis. They indulge in bribery, fraud and various other such ill practices that give rise to corruption.
Lack of Transparency – In a democratic government, the public can question the government for the service provided by the public sector and the government is bound to show the clear picture. However, the private sector organizations are not bound by any such law and thus there is a lack of transparency.
Ambiguity – Privatization has led to numerous choices in various sectors. As there are more and more options being added to the market every day, the same product is sold at different forms and prices.
Thus, privatization has both positive and negative repercussions. While there are definite aspects in which the customer’s advantage owing to this shift, there are others wherein the customers have to endure.