Arguments in Favor of Denationalization of State Enterprise - QS Study
QS Study

Arguments in Favor of Denationalization of State Enterprise

In this globalization age, a government with a view to establishing socialized view in the economy started nationalization of various private organizations and established many new industrial factory & social organizations by government entrepreneurship. But these state enterprises are giving continuous losses in every year because of the corruption, irregularity, and inefficiency in management. For this situation denationalization of state, enterprises are needed for the economic development. Arguments in favor of denationalization of state enterprises are given below:

Reducing wastage and misuse: State enterprises waste and misuse more than they earn which is harmful to national wealth. So state enterprise can prevent this wastage and misuse by the nationalization of industrial factories and can save the national factories and national resources.

Ensuring efficient management: The responsibility of management and operating the state industrial and commercial organization lies on government employees and persons influenced by political panics. Their education, experience, mentality are not in favor of managing industries so these organizations become denationalized experienced managers will be in charge of the organization.

Reducing national credit: The losses of state enterprise are compensated by taking loans from countries and foreign financial organization for this reason national credit is an increase. Through the denationalization of state enterprises, the government reduces national credit and save national interest.

Quick decision making: In case of state enterprises taking a quick decision is not possible because of the bureaucratic management. If these organizations are taking into private ownership, they will ensure efficient management for their own benefit and will take quick decision for the development of the organization.

Increasing competition: It creates monopoly business in a fervor of state. If these business organizations hand over to private owners, then competition will arise and people will be benefited. As a result, they will try to supply product at a fair price to capture the market and satisfy the customers.

Establishing good industrial relationship: They are always used by the different political parties these political employees always create political environment unnecessarily. As a result, production gets obstructed and employee-management relation becomes bad. These problems can be solved by denationalization of state enterprises and establish good industrial relationship.

Increasing government revenue: They are operated as unprofitable organizations because of the corruption, inefficiency in management etc. If these organizations become denationalized, then the government will get a huge amount of tax, vat, etc. as revenue.

Reducing public tax: The total amount of losses of state enterprises get coordinate with the revenue so public tax increases. This type of national loss can be reduced by denationalization of unprofitable state enterprises and this will free the public from giving more tax.

From the above discussion, we can say that government should hand over state enterprises through the denationalization process for reducing government subsidy, corruption, nepotism and others illegal activities. But few organizations must be in the hand of government otherwise private owners create maximum profit than public welfare.