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Can the complete privatization of state-owned banks be the panacea to all the aliments that affect the public sector banks (PSBs)? Critically analyse.

Topic: Inclusive growth and issues arising from it.

4. Can the complete privatization of state-owned banks be the panacea to all the aliments that affect the public sector banks (PSBs)? Critically analyse. (250 words)

Difficulty level: Moderate

Reference: Live MintInsights on India

Why the question:

A clamour for complete privatization of state-owned banks seems to have arisen in policy corridors once again. This is not a new demand; discussions about the government liquidating its entire shareholding in public sector banks (PSBs) have taken place many times in the past, without any specific policy objectives spelt out.

Key Demand of the question:

To write about pros and cons of the complete privatisation of public sector banks (PSBs).

Directive word: 

Critically examine – When asked to ‘Examine’, we have to look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications. When ‘critically’ is suffixed or prefixed to a directive, one needs to look at the good and bad of the topic and give a fair judgment.

Structure of the answer:

Introduction: 

Begin by stating objectives of privatisation.

Body:

First, write about the positive role played by public banks in the Indian economy.

Next, write about the various issues plaguing the state-owned banks in India. Cite statistics to substantiate.

Next, write about positives of complete privatisation of state-owned banks.

Next, write about the negatives of complete privatisation of state-owned banks.

Conclusion:

Conclude by writing a balanced opinion for way ahead.