Posted in Finance, Accounting and Economics Terms, Total Reads: 411
Deprivatization is the act of taking control of privately managed services by public sector or Government. There are cases when control of privatized services is taken back by the Government in view of concerns raised against the private parties.
Privatization has happened in many sectors like water, power, healthcare, transportation, etc. The idea behind privatizing these sectors was to improve efficiencies and lower the burden of control resting on the Government.
However, the Government deprivatized some of the strategic sectors as there were complaints of reduced access, increased tariffs, and failure to produce efficiency gains as promised by the private parties. The main issue raised by the general public was that private parties were running the operations focusing solely on profitability. By deprivatizing, the Government reduces monopolistic power of the company and offers the services at reasonable cost to consumer.
Water was one of the areas that was privatized in a large scale globally. But today, many countries are taking up water deprivatization due to strong campaigns run by local residents against exorbitant tariffs collected by the private companies.
Similarly, in India, a lot of ration shops have been deprivatized under the Public Distribution System (PDS) scheme. Significant leakages were observed in the PDS system of many states when ration shops were run by private parties. So the Government deprivatized them and ran them using Self Help Groups (SHGs) and cooperative societies. Once deprivatization happened, the PDS system of those states became more efficient and successful.