Privatization is a broad concept and its meaning goes slightly different in different countries. Privatization generally refers to inducing private sector participation in the management and ownership of Public Sector Enterprises.
In a narrow sense, privatization implies induction of private ownership in state owned enterprises. It is the process of transferring ownership of a business, enterprise, agency, public service or public property from the public sector (a government) to the private sector, which usually operates for a profit.
Privatization in India
India is a mixed economy with both the private sector and the public sector performing various activities in accordance with regulations. But the public sector was affected by inefficiencies and incompetence in a non-sustainable manner by 1991. The New Industrial Policy of 1991 contained several reform measures for the public sector. Some of them are selling of loss making units to the private sector, inviting private participation in PSEs, and strategic sale. Some of these reform measures included privatization in a low degree.
In India, hence privatization was in a unique form in accordance with the priorities of our mixed economy and as well as by considering operational aspects of the PSUs. Privatization in the country was launched mainly to enhance the efficiency of the public sector enterprises as well as to concentrate the operation of the public sector in priority areas.