Privatisation me
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Transcript of Privatisation me
A Presentation on
Privatization
-ByB.Joshpin
Bala
“The transfer of public assets, operations or activities to private enterprise”.
Privatization was introduced during the early eighties by Rajiv Gandhi
The government of PV Narsimha Rao gave the actual speed by introducing the new industrial policy
Privatization is the process of transferring ownership of a business, enterprise, agency, public service or public property from the public sector to the private sector.
The business that operates for a profit or non-profit organization.
Privatization
Why Privatization????
• To reduce government involvement in commercially viable activities • Increase efficiency in the delivery of
programs and services • Provides competition in market place
which transfers the lower price and greater choice for the consumers.
Variations in privatization
Private sector choice for the production of a services.
Entire responsibility transferred from public to private
Public sector choice financing with private sector operations.
joint activity of public & private
Deregulation of private firms.Govt. reduces or eliminates the regulatory imposed on private.
Methods of privatization
Share issue privatization selling shares on the stock market.
Asset sale privatization selling entire organization to a strategic
investor by auction.
Voucher privatization distributing ownership to all for free or at
lower cost.
Examples of privatization
Toll roads, bridges and airport:
A significant developments in public private partnerships is the lease of toll roads, bridges, and tunnels by state and local governments to private contractors.
These kinds of deals have previously occurred in Europe and Australia
Government could not do in 50 add years, privatization did in just 4-5 years.
The result is we have a great highways and airports.
Six industries which are not reserved for private sector
Arms and ammunition
Indian railways
Atomic energy
Chemical fertilizer
CigarettesHazardous Chemicals
Advantages of privatization
Improved efficiency: Private company have a profit incentives
to cut costs and be more efficient. Example:British airwaysLack of political Interference: Government companies can be motivated by
political pressures rather than sound economic and business sense.
Example : A state enterprise may employ surplus workers which is inefficient.
Short term view: Government may be unwilling to
invest in infrastructure improvements which will benefit the firm in the long term because they are more concerned about projects that give a benefit before the election.
Increased competition: Increase in competition that can
be the greatest spur to improvements in efficiency.
Disadvantages of privatizationThe private companies don’t like
to have their branches in rural cities.
Their services remain confined to cities where sufficient clients are available.
Problem of unemployment
Aims at high profits which adversely effect the interest of the
community
Market share of privatization is increasing year by year
•It is commonly believed that the private sector can offer greater performance and economic efficiency than the public sector, but in the case of public water utilities this has not been proven.•According to various studies, publicly owned utilities have lower costs than privately owned utilities. •Poor people may not afford the cost of water due to privatization.
Stop water privatization!!