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Thursday, 21 July 2011

Discuss the advantages and disadvantages of nationalization or Why industries were nationalized in 1972 in Pakistan


In the period of Mr. Zulfiqar Ali Bhutto government nationalized basic industries in 1972. Life insurance company was also nationalized in the late 1972. Vegetable ghee units were nationalized in 1973. Commercial banks and shipping were take it over in 1974. While flour mills, rice bushing and cotton ginning factories were nationalized in 1976.

MAIN CAUSES or ADVANTAGES OF NATIONALIZATION :-
Following were the main causes of nationalization :

1. Equal Distribution of Wealth :-
The government nationalized the industries and banks to provide equal distribution of wealth. Because few families had full control over the major portion of national wealth. So government decided to provide equal chances of earning to the people by nationalizing the units.

2. End of Monopoly :-
There was complete hold of few capitalists over the supply of the market. They were charging higher prices from the consumers. To remove the monopolies government nationalized the industries, so that goods should be provided to the public at lower price.

3. Check on Smuggling and Hoarding :-
The government nationalized the various banks on this ground that capitalists were misusing the savings of the whole nation. They used the credit for hoarding and smuggling.

4. Fair Distribution of Credit :-
The banks were nationalized to provide the fair distribution of credit. All the classes of the public will enjoy the credit facilities. Small farmer and small businessman was ignored by the banks before nationalization.

5. Economic Stability :-
It was also argued that all the business institutions will adopt uniform policy after nationalization. It will provide economic stability.

6. Effective Planning :-
It was also argued that after nationalization government will prepare the plans more effectively and the rate of out put will rise.

7. Increase in Production :-
It was also argued that after nationalization the labour will work more honestly and efficiently to increase the production of these units.

8. Increase in Social Welfare :-
Before nationalization all the profit of industries and banks was in few hands. But after nationalization it will be used for the best interest of the whole nation.

9. Price Stability :-
It was also climes that state bank can minimize the fluctuation in the economic activity with the help of nationalized commercial bank.


DISADVANTAGES OF NATIONALIZATION

1. Increase in Corruption :-
The nationalized industrial units were handed over to the government officials and it increased the corruption in this sector. Efficiency of the units reduced after nationalization.

2. Fall in Production :-
After the nationalization production of various units decreased and rate of profit removed. The managers of those units did not pay proper attention.

3. Sick Industries :-
In the short period these industries suffered a loss and were declared sick industries.

4. Carelessness of Labour :-
After nationalization workers became careless about their duties and this attitude of labour affected the production adversely.

5. Public Sector Over Weighted :-
Public sector has become overweight and it is health risk for the economy. More over public sector is flourishing at the expenses of private sector.

6. Private Sector Discouraged :-
The nationalization policy discouraged the private sector, and due to this rate of investment decreased. Even the target of private investment in the 8th five year plan could not achieved due to the fear of nationalization.

Keeping in view above defects government of Pakistan denationalized the various industries. Now in the present budget of government has provided various incentive to promote the private industrial sector. Present government is trying is best to encourage the private industrial sector.

2 comments:

Anonymous,  30 May 2013 11:19  

You did a very excellent job.Please, receive kindly our congratulations.

Anonymous,  6 November 2013 06:41  

thank you very much, it helped me to prepare for a presentation

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