Examkin

Question

Difficulty: HardPrivatization, Commercialization, and Deregulation of Public Enterprises

To eliminate chronic fiscal deficits, the federal government restructured a national railway corporation by granting it complete managerial autonomy, withdrawing all operational grants and subsidies, and requiring it to cover both operational and capital expenditures strictly through market-driven tariffs, while maintaining 100% state equity ownership. Which public enterprise reform strategy does this enterprise transformation demonstrate?

  1. A
    Outright privatization
  2. B
    Partial commercialization
  3. Full commercializationAnswer
  4. D
    Market deregulation

Answer

Full commercialization is the reform strategy where a state-owned enterprise operates as a fully profit-driven corporate entity with total financial self-sufficiency and zero government subsidies, while remaining entirely under state ownership.
Full commercialization occurs when a public enterprise is restructured to operate strictly as a commercial profit-making entity without any financial subvention or subsidy from the government, while maintaining total public ownership of its equity.

Step-by-Step Solution

1
Analyze equity ownership state in the scenario
The state retains 100% equity ownership, ruling out privatization options.
Privatization fundamental criteria involves divestment of government shareholding to private individuals or entities.
2
Evaluate subsidy status and financial autonomy requirement
The enterprise must cover all capital and operational expenses without any government grants or subsidies.
Complete withdrawal of state subvention for both capital and recurrent expenditure distinguishes full commercialization from partial commercialization.
3
Distinguish enterprise restructuring from sector regulation
The action reshapes an existing state corporation's internal operating mandate rather than opening the industry market statutory rules.
Deregulation changes market entry rules, whereas commercialization changes enterprise financial and operational structures.

Key Concept

Full Commercialization vs. Partial Commercialization and Privatization
Estimated Time:1m 30s
Rate this question

Topics

Privatization, Commercialization, and Deregulation of Public Enterprises

More questions from this topic