Effect of privatization on economy and its adverse effects on economy

Abstract

Privatization is now become phenomenon of world, it is now practiced by most of organizations who generally wanted to achieve specific goals to flourish their economy by selling those organization creating burden on economy. Therefore in wake of many recession and certain monarchies begin to appear on world map, they have achieved different approaches on setting new targets for achieving better economic growth rate and good economic trend has become their only necessity to achieve such targets of more prosperous economy Prime assets of Pakistan were generally thrown for use of favorites and thus privatization of such economy diamond proved as a failure for economy and our economy began to move toward recession. Privatization of 63 industries including two banks named as ABL and MCB, 7 industries related with automobile category, 8 cement plants, 5 chemical plants, 1 fertilizer plant, 16 units of ghee, 14 ROTI plants and 1 textile unit. Gross Domestic growth rate was generally very much higher than 6% in 1980 after that during rapid privatization diminished to 4% in post privatization period. Most of units have been closed by its purchasers after privatization because inability and inefficiency of Pakistan privatization commission to check the purchaser’s creditworthiness. Most of units were closed soon they were privatized because government has not paid a little attention toward financial status of firm or invest who was willing to buy a company thus a large company which was contributing a little before privatization period, became idle .SCHON group has purchased national fiber, QUAID A ABAD mill and PAK china plant, therefore being bad reputation in Pakistan’s market these industries were sold to this group and consequences which had not been repaired. All three were closed after privatization. These all organization have shown a diversified effect on economy because SCHON group have not any interest in running them they generally expel their amount invested in form of privatization bidding and after gaining benefits though asset stripping they have sold the firm..L.T general(R) SAEED QADIR and SARTAAZ AZIZ generally gave a lot of explanations for unwarranted favoritism. 4.6. Privatization of profitable organization always has negative consequences on GDP Privatization is the process in which government has given the chance to other private entities to select the fate of its economy but privatizing financial institution another organization running on government expense , government has lost a million of dollars in privatization phase as it has lost its resources in form of corruption , selecting higher consultancy and privatizing those institution that are running on profits , thus whenever government has launched such practice there is always one thing in their mind is that whole amount should be disposed of at debt retirement policies and poverty alleviation techniques by education more citizens and removing inequality in income distribution. Because of such dreams government has privatized it’s all those organization which were giving more double return in form of loans whenever they borrowed from state bank. These firms were also giving larger profits and double taxes to the government than pre-nationalization tenure. Thus privatizing such institution not only mean to get our employees ready for sitting at home idle but also reduction in revenues that government used to get for other fruitful activities , now all that amount would go in barrels of foreign direct investors , and we soon realized the current of swimming against current