Your SlideShare is downloading. ×
0
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Trends in public and private sector in india
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Trends in public and private sector in india

13,446

Published on

-- …

--
ashu..

Published in: Business, Technology
4 Comments
7 Likes
Statistics
Notes
No Downloads
Views
Total Views
13,446
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
426
Comments
4
Likes
7
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. BY: Ashutosh Gupta Krishan Kumar TRENDS IN PUBLIC & PRIVATE SECTOR IN INDIA. TECNIA INSTITUTE OF ADVANCE STUDIES ROHINI, NEW DELHI  Presentation On
  • 2. We hereby acknowledge the fact that making of this presentation has given us knowledge about the topic “Trends in Public & Private Sector in India”. We are grateful to our Business Environment teacher who is also our Dean Academics Mr. Ajay K Rathore Sir for giving us an opportunity to prepare a presentation over this topic and the help he provided to us to complete this presentation successfully. And last but not the least We’re Thankful to our classmates for the cooperation they’ve extended to us in completion of this presentation.
  • 3. CONTENTS: <ul><li>Introduction </li></ul><ul><li>Public sector: Objectives, Growth & Performance </li></ul><ul><li>Private Sector: Objectives & Growth </li></ul><ul><li>Comparisons: Public v/s Private Sectors </li></ul><ul><li>Share in Gross Domestic Savings. </li></ul><ul><li>Share in Gross Domestic Capital Formation. </li></ul><ul><li>Share In Employment Source. </li></ul><ul><li>Defects: Public Sector & Private Sector </li></ul><ul><li>Positive Aspect of Private Sector </li></ul><ul><li>Conclusion </li></ul><ul><li>References </li></ul>
  • 4. Private Sector A private sector enterprise is an organisation which is owned, managed & controlled by private individuals or a group of individuals or both. It is also engaged in business activity but with the motive of profit maximisation rather than public service like in case of public sector enterprise. <ul><li>Public Sector </li></ul><ul><li>A public sector enterprise is an organisation which is </li></ul><ul><li>Owned by public authorities including Central, State or Local authorities, to the extent of 50% or more; </li></ul><ul><li>Is under the top managerial control of owning public authorities </li></ul><ul><li>Is established for the achievement of a definite set of public purpose </li></ul><ul><li>Is consequently placed under a system of public accountability </li></ul><ul><li>Is engaged in an activity of business character </li></ul>
  • 5. Objectives of Public Sector Enterprise: <ul><li>Helps in rapid economic growth & industrialisation of the country & creation of necessary infrastructure for economic development, </li></ul><ul><li>To earn return on investment & thus generate resources for development, </li></ul><ul><li>To promote redistribution of income and wealth, </li></ul><ul><li>To create employment opportunities, </li></ul><ul><li>To promote balanced regional development , </li></ul><ul><li>To promote import substitution , save and earn foreign exchange for the economy </li></ul><ul><li>Acts as a countervailing force and put up an effective competition to undertakings in private sector and </li></ul><ul><li>To gain control over the commanding heights of the economy. </li></ul>
  • 6. Growth of Public Sector Undertakings Source: Business Environment by Francis Cherunilam (2008) Period Total Investment (Rs. Cr.) No. of Enterprises (Owned By Central Gov.) 1 st Plan (1951-1956) 29 5 2 nd Plan (1956-1961) 81 21 3 rd Plan (1961-1966) 953 48 Three Annual Plans (1966-69) 2410 73 4 th Plan (1969-1974) 3902 85 5 th Plan (1974-1979) 6237 122 6 th plan (1980-1985) 18225 186 7 th plan (1985-1990) 42811 221 8 th plan (1992-1997) 118492 237 9 th Plan (1997-2002) 201500 238 10 th Plan (2002-2007) 324632 240 11 th plan (2007-2012) 4,21,089 244
  • 7. Reasons of growth of Public Sector <ul><li>The Industrial Policy Resolution of 1956 enlarged the role of the public sector. </li></ul><ul><li>Schedule A to the Resolution enumerated 17 industries, the future development of which would be the exclusive right of the state. </li></ul><ul><li>Schedule B to the Resolution contained a list of 12 industries which would be progressively state owned & in which the state would, therefore, generally take the initiative in establishing new units. </li></ul>The Industrial Policy of 1956 is the basic policy of India. It was more of a restrictive in nature for setup of new private industries. The Public Sector flourished in the time being before the introduction of new Industrial Policy of 1991 which was more liberal in nature.
  • 8. Share of Public Sector <ul><li>At Current Prices it accounted for: </li></ul><ul><li>7.5% of Net Domestic Product in 1950-1951, </li></ul><ul><li>25% of Net Domestic Product in 2007-2008. </li></ul><ul><li>It also accounts for: </li></ul><ul><li>One-fourth of Gross Domestic Product (GDP), </li></ul><ul><li>One-third of the Exports. </li></ul>
  • 9. Source: Essentials Of Business Environment by K. Ashwathappa (10 th edition 2008) Six Indian Public Sector companies figure in the latest list of the 500 biggest industrial corporations, released by Fortune International. They are: Name of Company Ranking (Out of 500) Indian Oil Corporation 144 Oil & Natural Gas Corporation 278 Steel Authority of India Ltd. 332 Hindustan Petroleum Corp. Ltd 371 Coal India Ltd. 371 Bharat Petroleum Corp. Ltd 474
  • 10. Performance of Central Public Sector Enterprises, during April-September, 2006 Sl. No. Industry GDP Nominal Growth During April-September 2005 2006 Rate 1. Agriculture, forestry and fishing 253839 277668 9.39 2. Mining and quarrying 37935 43487 14.65 3. Manufacturing 242452 278986 15.07 4. Electricity, gas and water supply 32933 35608 8.12 5. Construction 101494 116667 14.95
  • 11. Performance of CPSEs, during April-September, 2006 6. Trade, hotels, transport and communication 366780 426935 16.40 7. Financing, insurance, real estate and business Services 222882 254923 14.38 8. Community, social and personal services 211655 239039 12.94 GDP at factor cost 1469970 1673313 13.83
  • 12. Objectives of private sector enterprise: <ul><li>To reduce political interference in the management of enterprise, leading to improved efficiency & productivity, </li></ul><ul><li>To provide adequate competition to the public sector, </li></ul><ul><li>To generate cash in order to fund the ever-increasing expenses, </li></ul><ul><li>To reduce the concentration of economic power in the country. </li></ul>The government resorts to privatisation with the multiple objectives which are as follows:
  • 13. Growth of Private Corporate Sector Note: Figures in brackets are percentage of total paid-up capital Source: Tata Services Ltd, Statistical Outline of India (2001-2002) 1957 1971 2000 No. of Companies 29,357 30,322 5,42,308 <ul><li>Government </li></ul>74 314 1,257 <ul><li>Private </li></ul>29,283 30,008 5,41,051 Paid Up capital (Rs. Cr.) All Companies 1,080 4,500 2,67,898 (100.00) (100.00) (100.00) Government Companies 70 2,060 95,842 (6.8) (45.8) (35.8) Private 1,010 2,440 1,72,056 Companies (93.2) (54.2) (64.2)
  • 14. Reasons for Growth of Private Sector <ul><li>Political will towards privatisation. </li></ul><ul><li>Financial Reforms, </li></ul><ul><li>Usage of more advanced technology, </li></ul><ul><li>Young & large English Speaking class. </li></ul><ul><li>Opening up of Indian Economy has led to free flow of FDIs along with modern cutting edge technology. </li></ul>
  • 15. Share of Private Sector <ul><li>Accounts for 75% of National Domestic Product in 2007-2008 </li></ul><ul><li>It is estimated that out of the total US $ 15 Billion KPO service business around US $ 12 Billion of business would be outsourced to India by the end of 2010 </li></ul>
  • 16. <ul><li>Reliance Industries Limited </li></ul><ul><li>Tata Consultancy Services (TCS) </li></ul><ul><li>Infosys Technologies Ltd </li></ul><ul><li>Wipro Limited </li></ul><ul><li>Bharti Tele-Ventures Limited </li></ul><ul><li>ITC Limited </li></ul><ul><li>Hindustan Lever Limited </li></ul><ul><li>ICICI Bank Limited </li></ul><ul><li>Housing Development Finance Corp. Ltd. </li></ul><ul><li>TATA Steel Limited </li></ul>Top 10 Private Sector Companies in 2008
  • 17. Comparisons <ul><li>Share In Gross Domestic Savings </li></ul><ul><li>Share In Gross Domestic Capital Formation </li></ul><ul><li>Employment Provider </li></ul><ul><li>Share In National Domestic Product 2002 </li></ul>
  • 18. (As a %age of GDP) SECTOR-WISE DOMESTIC SAVINGS Years Household Sector Private Sector Public Sector Gross Domestic Savings 1 2 3 4 5 New Series (Base: 1999-2000) 1950 5.7 0.9 2.0 8.6 1955 9.0 1.2 2.1 12.3 1960 6.5 1.6 3.1 11.2 1965 8.6 1.4 3.6 13.7 1970 9.5 1.5 3.3 14.2 1975 10.9 1.3 4.7 16.9 1980 12.9 1.6 4.0 18.5 1985 13.1 1.9 3.9 19.0 1990 18.4 2.7 1.8 22.8 1995 16.9 5.0 2.6 24.4 2000 21.6 3.9 -1.8 23.7 2005 24.2 7.5 2.6 34.3 2007 23.8 7.8 3.2 34.8
  • 19. (As a %age of GDP) SECTOR-WISE GROSS CAPITAL FORMATION Year Public Corporate Sector Private Corporate Sector Gross Capital Formation 1 2 3 4 (BASE : 1999-2000) 1950 2.6 6.1 8.7 1955 5.4 6.3 11.7 1960 6.7 5.8 12.5 1965 8.1 6.9 14.9 1970 5.8 7.9 13.8 1975 7.4 8.6 16.1 1980 8.9 9.5 18.4 1985 10.7 9.7 20.4 1990 9.6 13.4 23.0 1995 8.3 16.2 24.4 2000 6.5 16.3 22.7 2005 7.0 24.0 31.0 2007 7.4 25.0 32.5
  • 20. EMPLOYMENT IN PUBLIC AND ORGANISED PRIVATE SECTORS Years Public Sector Private Sector end march end march 1981 154.8 74.0 1991 190.6 76.8 1995 194.7 80.6 2000 193.1 86.5 2002 187.7 84.3 2003 185.8 84.2 2004 181.9 82.5 2005 180.1 84.5 2006 181.9 87.7 In Lakhs
  • 21. At Current Price Share of Public & Private Sector in Net Domestic Product (Rs. Crores at 1993-94 prices) S. No Industry Public Sector Private Sector Total 1 Agriculture, Forestry & Fishing 4,549 2,70,309 2,74,858 (1.7) (98.3) (100.0) 2 Mining & Quarrying 16,785 3,863 20,645 (81.3) (18.7) (100.0) 3 Manufacturing 21,106 1,27,015 1,48,121 (14.2) (85.8) (100.0) 4 Electricity, Gas & Water 18,487 -3,878 14,609 (126.5) (-26.5) (100.0) 5 Construction 9,607 46,089 55,696 (17.2) (82.8) (100.0)
  • 22. Continued: Sr. No Industry Public Sector Private sector Total 6 Trade, Hotel & Restaurants 5,267 1,58,797 1,64,064 (3.2) (96.8) (100.0) 7 Transport, Storage & Communications 36,044 30,066 66,110 (54.5) (45.5) (100.0) 8 Finance, Insurance, Real Estate & Business Services 47,074 84,453 1,31,527 (35.8) (64.2) (100.0) 9 Community, Social & Personal Services 95,509 48,203 1,43,712 (66.5) (33.5) (100.0) Total 2,54,428 7,64,917 10,19,345 (25.0) (75.0) (100.0)
  • 23. Defects in Public Sector Enterprises: Leading to Privatisation <ul><li>Economic Inefficiency- High C.O.P, Inability to Innovate, Cost Delays in delivery of goods produced, </li></ul><ul><li>Ineffectiveness in provision of goods & services. E.g. Failure to meet objectives, diversion of benefits to elite group & too much political interference. </li></ul><ul><li>Rapid expansion of bureaucracy- Inefficiency of government, problems in labour relations, straining public budget & adverse effects on the economy. </li></ul>These problems have led many governments to undertake programs of public sector reform, and pushed by a need to curb public expenditure, to revaluate the possibilities for shifting publicly managed activities into the private sector.
  • 24. Defects of Privatisation: <ul><li>Emphasis on Non-Priority Industries, </li></ul><ul><li>Emergence of monopoly power and concentration, </li></ul><ul><li>Industrial Disputes, </li></ul><ul><li>Industrial Sickness. </li></ul>
  • 25. Positive effects of the growth of private sector in India <ul><li>Manufacturing registered 11.9% growth. </li></ul><ul><li>The passenger vehicles sector grew by 11.61% during April-May 2007. </li></ul><ul><li>Electricity, gas & water supply performed well and recorded an impressive growth rate of 8.3%. </li></ul><ul><li>Construction growth rate rose to 10.7%. </li></ul><ul><li>Trade, hotels, transport and communication registered a growth rate of 12%. </li></ul>
  • 26. <ul><li>Exports grew by 18.11% during the 1st quarter of 2007-2008 and the imports shoot up by 34.30% during the same period. </li></ul><ul><li>The food sector is estimated to be of US$ 200 billion now and it is expected to grow to $310 billion by 2015. </li></ul><ul><li>Financing, insurance, real estate and business services recorded an impressive growth rate of at 11% during the 1st quarter of this fiscal. </li></ul>
  • 27. Conclusion <ul><li>The debate about the costs and benefits of private or public sector is infinite. It hinges on the economic and political merits of the role of government in society as well as the economics of ownership, and has found supporters on both sides of the policy divide. Interestingly, privatization programmes were started in the 1980s purely &quot;on faith&quot; and not because the policy makers had found conclusive evidence for the superiority of the private sector. </li></ul><ul><li>Though the sponsors of private ownership are in ascendance now, the state ownership was considered the most successful economic policy only a few decades ago. </li></ul><ul><li>However, the studies do show that only those mismanaged public enterprises could generate favourable budgetary impact, which were sold at competitive prices to buyers who could improve their performance and fully realise their market potential. </li></ul><ul><li>The public sector inspite of its defects is a driving force for private sector in India because it’s the public sector that takes initiatives to develop infrastructure. There have been declines in performance of public sector companies but we should never forget that they provide the foundations to the private sector. </li></ul>
  • 28. Continued: <ul><li>The acceleration in growth in the past five years or so is largely driven by the private sector. We are not only reaching the South-East Asian levels of saving (32.4 per cent) and investment (33.8 per cent) rates but the private sector has played a major role in generating these savings and investment </li></ul><ul><li>Though privatization alone may not be the sole reason for improved efficiency, there is no denying the fact that competition and regulation would have remained elusive and of academic value in developing countries economies without the emergence of a potent and assertive private sector. The fact is that the private sector is superior in terms of efficiency and cost effectiveness only where the regulators have ensured a competitive market. Higher the degree of competition, greater the resilience and efficiency level of the private sector. However, we must not forget that due to the inherent trade off between equity and efficiency, the private sector, compared with the public sector, would opt for efficiency that can be translated into profit - its primary motive for survival. </li></ul>
  • 29. References: <ul><li>Datt & Sundaram (2005): “Indian Economy” </li></ul><ul><li>Dhingra I.C. (2005): “Indian Economy” </li></ul><ul><li>Sheikh Saleem (2006): “Introduction to Business Environment” </li></ul><ul><li>Ashwatthapa. K (2006): “ Essentials of Business Environment” </li></ul><ul><li>Cherunilam Francis (2008): “Business Environment” </li></ul><ul><li>Websites of: Reserve Bank Of India </li></ul><ul><li>Ministry of Commerce </li></ul><ul><li>Ministry of Information & Broadcasting </li></ul><ul><li>Central Statistical Organisation </li></ul>

×