Political Science · Political Processes in India
A key reason given for the importance of privatisation is that it:
AIncreases private monopoly
BFavours the objective of social welfare
CReduces costs by minimising wastage and improving efficiency ✓ Correct
DRaises taxes on enterprises
Correct answer: (C) Reduces costs by minimising wastage and improving efficiency — Privatisation is valued for cutting costs and raising efficiency, so that is the answer.
Explanation
★Privatisation is valued for cutting costs and raising efficiency, so that is the answer.
★Private firms face competition and the profit discipline.
★This pushes them to minimise wastage.
★They tend to use resources more productively.
★Loss-making state units are turned around or exited.
★So privatisation is said to reduce costs and improve efficiency.
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