This paper is one of 18 papers published under a special series of publications by the Sri Lanka Economic Association (SLEA) with financial assistance from the United States Agency for International Development (USAID). The objective of these publications is to provide economic literature on current and topical themes on the economic issues. The paper maintains high analytical standards, but presented in a simpler language with less technical terms, mathematical equations and models. This paper covers a very broad area of economics while focusing in particular on the problems of privatisation.