Privatisation of public sector enterprises is often justified on grounds of efficiency and fiscal prudence. Critically examine this rationale. Assess its impact on employment security and worker rights. Suggest alternative approaches to reform.

Topic: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

Q5. Privatisation of public sector enterprises is often justified on grounds of efficiency and fiscal prudence. Critically examine this rationale. Assess its impact on employment security and worker rights. Suggest alternative approaches to reform. (15 M)

Difficulty Level: Medium

Reference: TH

Why the question:
Workers and farmers are facing a dire crisis, says ITUC national president

Key Demand of the question:
The question requires a balanced evaluation of the justification for privatisation, an analysis of its impact on jobs and labour rights, and viable reform-oriented alternatives that ensure inclusive economic governance.

Structure of the Answer:

Introduction

Present a sharp observation on India’s shifting approach from state ownership to strategic disinvestment and its contested implications.

Body

• Critically examine rationale for privatisation – Give both sides: economic logic and strategic/social counterarguments.
• Impact on employment and worker rights – Analyse job loss, informality, union weakening, and wage inequality.
• Alternative reform approaches – Discuss PPP models, PSE autonomy, non-core asset monetisation, and worker safeguards.

Conclusion

Suggest a future-ready approach balancing fiscal needs with public interest, labour dignity, and strategic autonomy.