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What are the advantages of deregulation to the National Economy?

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What are the advantages of deregulation to the National Economy?

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Government resources previously used for subsidizing petroleum products will be freed to undertake more developmental projects and programmes such as construction of good roads, clinics, hospitals, schools, and provision of good drinking water etc., for the benefit of the general public and especially the rural poor. The private sector is the engine of growth and deregulation has the potential to increase private sector participation in the petroleum industry to boost the national economy.

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Deregulation is the process of removing or reducing government legislation and laws typically in the economic sphere. It became common in advanced industrial economies in the 1970s and 1980s. Deregulation often tends to removing barriers to competition.

For Exa.,in UK many industries used to be a state monopoly such as, Gas, Rail, Buses and Mail service.However,due to deregulation new firms enter these markets and bring down the monopoly power of these state owned industries.

We can take the example of Mail service.For a long time,the govt. owned Royal Mail had a monopoly on delivering letter and parcels.The job of Royal Mail was to deliver letters anywhere in UK but competition was not allowed.

First time competition was allowed in parcels then in 2006 permission was given to any licensed operator to deliver letter and parcels to business and residential customers.

Advantages of Deregulation:

Increased competition in the market results in greater efficiency of the companies, leading to reduced costs and prices for consumers.

The second advantage is govt. regulation often involves high cost of bureaucracy which is not present in deregulation.

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