Does Adapting Privatization Help Reduce Corruption?

A resonating word in the Indian media and politics. Corruption. It is not only a part of the above-mentioned sectors but a part of all kinds of businesses and markets all over the world. Politicians from the opposing and ruling party keep bashing each other like playing a game of Ping pong, with corruption scandals to defame each other’s political parties. In either, everybody falls into the trap of corruption. Abuse of power awarded in terms of the profession is misused not only by the government officials but small-scale businesses, clerks, police officers, hospitals, and so on. Being a democratic country, corruption is a huge drawback for our nation since the citizens lost trust in their own countrymen and this starts off a cycle. This person does the same to another person, and the action keeps getting transmitted leading to everyone being involved in this sticky mess. Most of the focus is shifted on to the government because they are the people responsible for the maintenance of the country’s welfare and development. When such public sectors that belong to the government encourage corruption in a very casual, it-always-has-been-this-way manner, it infuriates people, and this becomes the target point of opposing countries or traders to point fingers at.

Now with the government of India, battling the monstrous pandemic of COVID-19, have introduced some new reforms from May 13th—17th, 2020. One of the many reforms was regarding the intent towards the privatization of Public Sector companies or state-owned corporations. The reform mentions that strategic sectors that require a PSE instead of public interest will have a mixture of public and private sectors. All the other sectors will be privatized/merged.


Privatization is the transfer of ownership from a public sector or government to a private sector. It is usually done to improve the efficient functioning and business of the company which, sadly, is not maintained by the government. This privatization is not new to India since similar hand-overs have been attempted in the past. One marvellous example is that of Air India. Air India is a state-owned company whose debt was piling up and employment concerns were becoming so bad that they had to sell it off to a private sector company. But in vain.

According to the reform introduced by Nirmala Sitharaman, the strategic sectors like space and atomic energy would open up to private sectors for collaboration and not completely be left into their hands. For example, ISRO has had a singular hand in the country’s space program so far. Now they will allow start-ups or other related private companies to engage in future projects regarding space travel and space exploration. Research reactors that are used for the production of radiation therapy methods for cancer will be available in the Public-Private partnership. The current scenario of the economy does not look very good with the dwindling stock market as the pandemic still exists and is increasing its effect every day. Now the question is, will this help the economy?

Privatization will bring in a lot of collaborations among the various sectors and will give a splendid opportunity for young entrepreneurs to show their skill and talent. The output will be a refined and efficient one as the costs are reduced and so is the public debt. Privatization focusses more on the consumer and his/her needs and therefore will bring in revenue and consumer markets. Though there are many opinions about how this reform could go right or wrong, another question pops up. Does it affect corruption and if so, in what way? Privatization usually has a profit, but that is mostly for the brief term with the private company being the recipient of the success. A monopoly is brought in gradually entrusting the position to one gaining firm after privatization. Therefore, the officials enjoy this, not the people.

Many researchers who study the patterns behind the politics have found that corruption depends on the market concentration, so the market is ruled by a few companies that occupy or possess most of the share. While selling off a public sector enterprise and making it private, not all details are shared with complete transparency to the public. False data will cause the personal profits of the officials. The actual price vs the price for which it was sold to the company might have an enormous gap. The firms to which they plan to sell the public sector company is important. With selling to an inside firm, i.e., a firm that is already established in the stock market, the firm will rise in power and the resultant market structure becomes a monopoly. But if the buying firm is an outside firm, the prices are set in a way that both the seller and buyer benefit out of it.

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The need for privatization might itself be based on a corrupt idea for the benefits of government priorities and political profits. Another research states that privatization opens up new avenues for corruption in an environment where corruption is already severe. Bribery among the officials for favoring a particular firm or company, tweaking the bidding process, and so on occur.

Corruption is done in the shadows, and it is very difficult to bring it out into the light. There are so many points within a single process corruption can ease or favor that. The positive aspects of privatization which include the option of being able to bring in multiple minds within a field to discover and develop are overruled by the possibilities it brings for corruption to occur. So, to answer the question, the cons of privatization outweigh the pros given the state of the nation. This just goes to prove that corruption can infiltrate any scenario and rule. More care has to be taken and each citizen must act even more responsibly in their own terms to prevent getting eaten up by corruption.

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