Topic: Privatisation
Q6. “Privatisation is not just disinvestment but a strategic retreat of the state from economic domains”. Evaluate key outcomes of privatisation on public sector performance. How has it altered state capacity? (10 M)
Difficulty Level: Medium
Reference: InsightsIAS
Why the question
The pace of strategic privatisation and the shift from state-led production to regulatory oversight has intensified, making it necessary to evaluate efficiency outcomes and implications for state capacity.Key demand of the question
The question asks to assess how privatisation impacted public sector functioning and to analyse how state capacity, regulation and fiscal priorities have been reshaped due to the state’s economic retreat.Structure of the answer
Introduction
Define privatisation in post-1991 context and state withdrawal from non-sovereign economic domains, highlighting the idea of state transitioning to a facilitator and regulator.Body
- Highlight improved PSU efficiency, fiscal space and reduced operational burden due to privatisation.
- Discuss the shift of the state from producer to regulator and expansion of regulatory architecture.
Conclusion
Conclude with the need for calibrated privatisation supported by strong independent regulators to safeguard public interest and fair competition.
