Privatization means transferring ownership or management of public sector enterprises to the private sector. It aims to improve efficiency, productivity and competitiveness in the economy.
Correct Answer:
(A) Transfer of public sector assets to private entities
The transfer of ownership of public sector assets or enterprises to private entities is indeed called privatization. This process involves the government relinquishing control and ownership to private individuals or companies.
Ques: 2
Which of the following is a primary objective of privatization?
Correct Answer:
(B) Improve efficiency in service delivery
Improving efficiency in service delivery is a commonly cited objective of privatization. Privatization aims to introduce market forces and competition, potentially leading to better quality services, innovation, and reduced costs. Private companies are often seen as having a stronger incentive to cut inefficiencies and focus on productivity due to their profit motive.
Ques: 3
What is one major benefit of privatization in India?
Correct Answer:
(B) Increased tax revenue from private companies
Increased tax revenue is a significant benefit of privatization in India. When public sector enterprises are privatized and transferred to private ownership, the private sector companies generate profits and pay taxes, contributing to increased government revenue. This increased tax revenue can then be used to fund public services and other government initiatives.
Ques: 4
Which sector in India has seen significant privatization since the 1990s?
Correct Answer:
(B) Telecommunications
The telecommunications sector has experienced a significant shift towards privatization since the 1990s. This trend has been driven by economic liberalization, with governments opening up the sector to private operators and encouraging competition. The entry of private players has led to increased investment, infrastructure development, and a wider range of services, particularly in areas like mobile telephony and internet access.
Ques: 5
Which of the following is a demerit of privatization?
Correct Answer:
(B) Higher prices for consumers
Higher prices for consumers can be a demerit of privatization. When a government-run service or asset is privatized, the private company may charge higher prices to maximize profits, potentially making services less accessible or unaffordable for some consumers.