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Emergence of private sector and joint sector
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Emergence of private sector and joint sector


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  • 2. Objectives
    • Meaning and Emergence of Private sector and Examples
    • History of privatisation
    • Need of privatisation
    • Meaning and Emergence Joint sector and Examples
  • 3. Emergence of Private Sector
    • The new set of economic reforms aimed at giving greater role to the private sector an the nation building process of a reduced role to the public sector.
    • This was the reversal of the government strategy pursued so far by Indian planners.
    • To achieve this, the government redefined the role of public sector in the new industrial policy of 1991, adopted the policy of planned disinvestment of the public sector and decided to refer the loss making and sick enterprises to the board of industrial and financial recognition.
    • The term disinvestment used here means transfer in the public sector enterprises to the private sector.
    • It results in dilution of stake of the government ownership beyond 51%, it would result in transfer of ownership and management to the enterprise of private sector.
  • 4. History of Privatisation
    • The history of privatisation is very short, just 10 to 15 years old to be precise.
    • Though the real disinvestment started in 1980’s, the word ‘privatisation’ first made its appearance way back in the late 60’s.
    • The credit for inventing the word goes to Peter F. Drucker, who used the term first in his famous book, The Age of Discontinuity in 1969.
    • Ten years later, Margaret Thatcher gave practical shape to privatisation.
    • Following were the reasons for private sector came into existence:-
    • Lack of Competition
    • Over employment
    • Long Gestation period
    • Over capitalization
    • Inefficient Management
    • Absence of Appropriate pricing policy
    • Social Objectives
    • Lack of Efficient and Trained Staff
  • 6. Examples of Privatisation
    • Cochin international airport:
    • Also known as Nedumbassery Airport and  CIAL , is the largest and busiest airport in Kerala,  India
    •   it is the first airport in the country developed under a  public-private partnership model.
    • Rajiv Gandhi International Airport:
    • Rajiv Gandhi International Airport also known as Hyderabad International Airport, is an international airport near Shams Abad, Hyderabad, Andhra Pradesh, India.
    • it is the second public-private partnership venture in the Indian airports.
    • Bengaluru International Airport:
    • The airport is located in south of Devanahalli at Banglore city.
    • It has been converted into private airport recently.
    • Cont.
  • 7.
    • Indira Gandhi International Airport:
    • It is located in Delhi west.
    • Its an international airport.
    • It is the finest example of airports converted from government sector to private sector companies.
    • Chhatrapati Shivaji International Airport:
    • is the primary  international airport  in Mumbai ,  India , and is  South Asia 's second busiest  airport  in term of  passenger  traffic.
    • Formerly called Sahar (international) Airport and Santa Cruz (domestic) Airport, the two airports were merged and renamed after the 17th century  Maratha  Emperor,  Chhatrapati Shivaji  Bhosle, to Chhatrapati Shivaji International Airport. In February 2006, Mumbai International Airport Limited, a consortium of GVK Industries Ltd,  Airports Company South Africa , and Bidvest, [12]  was appointed to carry out the modernisation of Mumbai Airport.
    • Cont.
  • 8.
    • The Company CAC Tyres Limited was converted into  CAC Tyres and Tubes Private Limited under the provisions of section 31 of the Companies Act, 1956 on 8th July 2010.
    • Axis Bank Limited , formerly  UTI Bank , is a  financial services  firm that had begun operations in 1994, after the  Government of India  allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the Specified Undertaking of the  Unit Trust of India  (UTI-I),  Life Insurance Corporation of India  (LIC), General Insurance Corporation Ltd., National Insurance Company Ltd.,  The New India Assurance Company ,  The Oriental Insurance Corporation  and  United India Insurance Company  UTI-I holds a special position in the Indian capital markets and has promoted many leading financial institutions in the country. The bank changed its name to Axis Bank in April 2007 to avoid confusion with other unrelated entities with similar name. [3]  After the Retirement of Mr. P. J. Nayak, Shikha Sharma was named as the bank's managing director and CEO on 20 April 2009.
  • 9. Emergence of Joint Sector
    • The joint sector is an extension of the concept of mixed economy. The Industrial Policy Resolution 1956, sowed the seeds of the joint sector by advocating Government participation in the equity capital of private sector enterprises to promote socially determined pattern of industrial growth.
    • Cont.
  • 10.
    • Simply stated, the joint sector is a form of partnership between the public sector an the private sector. In a memorandum submitted to the Government of India, J.R.D. Tata observed that 'a joint sector enterprise is intended to form a partnership between the private sector an the government in which the government participation of capital will not be less than 26 per cent, the day-to-day management will normally be in the hands of the private sector partners, and control and supervision will be exercised by a board of directors on which governments, special financial institutions such as IDBI, IFCI, and other institutions like LIC and UTI and State financial and Industrial development corporations. Private sector consists of both Indian and foreign investing public and business houses.
  • 11. Examples of Joint Sector
    • Air India International provides another notable example. The company was established by the Tatas in 1948. The Government of India provided 49% share in its equity.
    • The Government subsequently acquired an additional 2 per cent equity from the Tata Sons Ltd to convert it into a government company.
    • In spite of the government holding 51 per cent of the equity the Air India continued to be under the management of the Tatas until it was fully taken over by the Government of India in 1953.
    • There were twelve other undertakings in 1966-67, in which the Central Government had a substantial stake in equity capital without having direct managerial control In a few cases equity participation by foreign enterprises in the public sector enterprises was also allowed.
    • Cont.
  • 12.
    • Madras Fertilizers Ltd. for example, was established as a joint enterprise in participation with Amoco Inc. (USA) and National Iranian Oil Co. (Iran).
    • The same foreign companies were partners in Madras Refineries Ltd too.
    • Cochin Refineries Ltd. was established with the participation of the Phillips Petroleum Co. (USA) and Duncan Brothers Ltd.; Lubrizol India Ltd.; with the Lubrizol Corporation (USA); and Triveni Structural's Ltd., with Voest Alpine (Austria). Maruti Udyog Ltd., is one of the latest cases where a foreign private corporation has been invited to join hands with the Government. A feature of all the above cases appears to be that public sector holdings are of majority nature and these are managed by Government nominated boards.
  • 13. THANK YOU