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Saturday, 19 March 2011

Disadvantages of nationalization or arguments against nationalization of industry

The nationalization of industry is not considered desirable on the following grounds:

1. Costly Management:-
The management of the nationalized industry is complicated and unwieldy. There are numerous department and paid persons i.e. directorate, regional office conduct its management.

2. Lack of decision making:-
All the necessary matters are decided by various officials and committees. In case of conflicting views, quick decision cannot be made for the urgent matters which is dangerous in business.

3. Lack of Efficiency:-
Nationalized industries are managed by salaried persons who are generally found less efficient as compared with privately owned concerns. There is also lack of flexibility and adaptability where are asset of private ownership.

4. Bureaucracy:-
There is extensive and rigid procedure of the state machinery by which event is dealt. Such stipulated rules has made the process of work every complicated which results in delay and loss of initiative.

5. Absence of profit motive:-
The salaried persons are not concerned with profit. Therefore, nationalized undertaking hardly run successfully due to lack of personal interest.

6. Chances of Loss:-
The loss of nationalized enterprises is regarded as the loss of the nation. So the structure of nationalized economy will greatly be effected by the failure of such scheme.

7. Limited Investment:-
Investors hesitate to invest large sum of money due to risk of nationalization. Therefore, volume of investment remains limited in private sector.

8. Undue Interferences:-
Nationalized enterprises are undesirably interfered by political parties. Such undue activities are handicapped in progress of sound business.

9. Objectionable to Public:-
Public generally criticizes the giant policy of nationalization. So government may not be in position to initiate new schemes freely.

10. Loose Supervision:-
The skilled and efficient businessmen are replaced after nationalization. The charge usually taken over by the officials who are incompetent and inexperienced to run the industries. So the production volume is affected due to loose supervision.

11. Uncertain Situation:-
The giant policy of state ownership does not remain for ever. It may be changed by the the change government which results in confusion and hesitation.

12. Chances of Fraud:-
The controlling authority of the state enterprises may play discrimination and favoritism. They may appoint dishonest and corrupt persons. Therefore frauds and manipulations may occur in the transaction which causes exploitation of the public.


sethuram 26 November 2011 at 23:30  

hey thanks this was really helpful for my studies

Anonymous,  4 January 2012 at 05:58  

great article helped heaps with my economics extended paper.

Anonymous,  15 February 2012 at 09:55  

Thank you so much. This really helped for my economics portfolio task for matric

Anonymous,  10 June 2013 at 03:12  

Thank you for your committement and motivation of this study because it helped my career in passing my public fianance examination. Thanks!

Anonymous,  6 December 2013 at 02:20  

I copied and pasted some of this, but your grammar is horrendous, therefore I had to change some of the wording. Tip: Give up.

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