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Impact of Privatization in Nepal

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  • Fatta Bahadur K. C.

    (Nepal Commerce Campus)

Abstract

Privatization of public enterprises have been very much in the agenda of economic liberalisation in contemporary world specially in developing and countries in transition. Different modalities of privatisation with lofty goals such as enhancing productive efficiency, allocative efficiency, economic efficiency and to rescue governments from budgetary burdens. Upon evaluation of private and public undertakings in Nepal it was revealed that public enterprises were capital intensive, better in capacity utilisation, profitability and with high economic returns compared to private undertakings. Barring a few, production level did not increase much. Three out of ten enterprises studied showed a marked improvement in sales of their products after privatisation whereas only two enterprises turned out to be profitable. On various yardsticks such as price, employment and labour productivity, product diversification, privatised enterprises have not been successful to the level committed before privatisation. Privatisation therefore might not be beneficial unless it is accompanied by competition in the market place. The key issue is whether such privatisation better serves the long run development interest of a nation by promoting a more sustainable and equitable pattern of economic and social progress.

Suggested Citation

  • Fatta Bahadur K. C., 1999. "Impact of Privatization in Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 11, pages 15-34, April.
  • Handle: RePEc:nrb:journl:v:11:y:1999:p:2
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