Privatisation means conversion of public sector enterprise to private sector.
Positive Impacts
The policy of privatisation adopted under the LPG policy produced several positive impacts on the economy. The important among them include the following :
(i) Increase in Competition : Before 1991, many sectors were reserved for public sector and private sector could not set up units in those sectors. Privatisation has allowed the entry of private sector in most of the industrial areas, thus resulting in competition.
(ii) Reduction in Political Interference : Public Sector Undertakings (PSUs) faced lot of political interference in their working. Privatisation has helped in stopping political interference. The enterprises under private sector do not face any outside interference in their operation.
Negative Impacts
While privatisation has numerous benefits, it has also some drawbacks.
(i) A greater opportunity for fraud and corruption to occur.
(ii) Higher costs for consumers.