The act of selling something, which you have not created and nor it has been capex-ed by your good self can be termed as divestiture. Wealth created by ancestors (not limited to father) and sold by one person for whatever the reason is the social meaning of divestiture.
But, full divestiture, also known as, privatization, occurs when all or substantially all the interests of a government in a utility asset or a sector are transferred to the private sector. In my view – Privatization is more efficient and effective when you are in distress for not affording comfort, but not an intelligent act at all. Comfort can not be fulfilled by divestiture or privatization.
A divested or privatized utility or public service is distinct from a private commercial enterprise in that the government generally holds some indirect form of control or mechanism for regulation over the privatized utility, in the form of a license granted to the entity to deliver the service to the public. Full privatization is distinguishable from partial privatization and joint venture arrangements between public and private where the public sector maintains a significant interest.
The privatization plan weakens SOCIAL SECURITY and threatens our ECONOMIC SECURITY further creating NATIONAL SECURITY and finally by creating trillions of dollars in new debt. We are doing Russian style of privatization. That is why, I am supposed to oppose the privatization of the public assets.
What is divestible object or asset for privatization for Government? Anything that has been created by Government and funded by public money. The objects of privatization are mainly – Port, Airport, Energy, Energy Infrastructure, Telecomm, Banks & Bonds, Insurance and its Deposits, Defense, Rail and Roads Hospital and Schools, uncontrolled food supply, Spectrum & Bandwidth, sometimes – air, water and sanitation etc etc etc. Finally we have seen Judiciary has gone partial privatisation. India has seen almost divestiture in every sector.
Full divestiture of a utility versus awarding a concession
Let me first explain – Utility – has various meanings but in terms of economics it refers to the usefulness or enjoyment a consumer can get from a service or good. Like Government discounts on electricity bill, roads were free in the past I mean once upon a time in India. And many more examples.
And, Concessions are partnerships between the public sector and mostly private companies, where the concluding is entrusted with the execution of works or the provision and management of services. In a concession, a company is mostly remunerated by being permitted to run and manipulate a work or service.
It can be understood as – a concession agreement is a contract that gives a company the right to operate a specific business within a government’s jurisdiction or on another firm’s property, subject to particular terms. Concession agreements often involve contracts between the nongovernmental owner of a facility and a concession owner, or concessionaire. The agreement grants the concessionaire exclusive rights to operate their business in the facility for a stated time and under specified conditions. Like Highway with many toll plaza.
I don’t see anything good in privatization of any thing constructed, developed or organised by Government in due span of time for public service. Government infrastructure of any kind eases life of citizen. If it is not then, it is corruption. If you are not getting good services – at port, airport or in rail or road in banks or institutions – it means it has been privatized. One sizable inconvenience to face is the chances for bribery and corruption that accompany privatization. But it is escalated at large amount. Business models are imposed by private organizations. They force government to make policy according to their bed-room size.
Divestiture of a prime infra or services may cause harm to pocket of lower middle class and small business group. Expanding the bridge between the rich and poor people. Disadvantages on prices as the firms are price takers. No restriction on raising cost to service. They can reduce output and increase prices for profits. Decrease services for cost saving. Job cut to make regular income. Job cut is an income.
Conclusion: China has nothing private and everything is in the peoples hand. The became manufacturing hub and PP is very high due to that only. India started privatisation long back it was partial due to fear of public response. But now-a-days in last two decades it is fashion. It will have severe impact on the security of the Indian mindset, More insecure citizens will be developed. As Indian citizens find government job not only for salary, it gives them sense of security. The main considerable achievement of privatization, however, has been to transfer of asset to one created by many, rather than to generate, wealth and income. Means corruption by means of law. Make no mistake – between – Privatization and Globalisation.