New Enroll here to Join NaBFID Analyst Into Class on May 6

    Question

    Which of the following is NOT an advantage of

    privatization?
    A Increased competition Correct Answer Incorrect Answer
    B Improved efficiency Correct Answer Incorrect Answer
    C Reduces government revenue dependency Correct Answer Incorrect Answer
    D Reduced government interference Correct Answer Incorrect Answer

    Solution

    Privatization does not necessarily increase competition; it may lead to monopolies or oligopolies in certain sectors. However, it improves efficiency, reduces government control, and provides additional revenue for the government. Key Points: 1. Privatization transfers ownership from the public to the private sector. 2. Leads to increased efficiency due to profit motives. 3. Can result in monopolies without proper regulatory mechanisms. 4. Helps governments reduce fiscal burdens. 5. Examples include telecom, aviation, and power sectors in India. Bee Facts: • Increased competition (a): Incorrect; may not always result from privatization. • Improved efficiency (b): A primary benefit of privatization. • Reduces government revenue dependency (c): True; government earns through disinvestment. • Reduced government interference (d): Encourages market-driven decisions.

    Practice Next

    Relevant for Exams: