The Government-Can-do-it Syndrome of Public Finance

1. Man Exploits Man
The Government-Can-do-it Syndrome of
Public Finance
Group 4
Manpreet Khurana – 14
Milan Pandey- 35
Sidharth Thacker- 36
Sanchit Malhotra - 37

2. Introduction

3. State Ownership in
the Dock
• Why do the Bad Samaritans
think state-owned
enterprises need to be
privatized?

4. Isn’t same
problem in
Private as
well?
Same problems will
occur in private-
sector as well
Enterprise either
run by Majority
owner or hired
managers
In case of SOE’s
No Budget
Constraints
Government
Bailouts

5. Success Stories

6. State Ownership
• Economic Theory- Public Sectors are superior
• Investors found private sector risky to invest –
Quick movement of Money
• Capital Markets are more prone to failures in
early stages
• SOE’s dominate in monopolistic situation
• SOE’s allows Equity among Citizens

7. Pitfalls of
Privatization
Selling the right
enterprises
Sell at Right price
Right Scale and Right
Timing is necessary
Sell to Right Buyers
Assign the Right
Regulatory

8. Conclusion
• SOE’s- Natural Monopolies ,
Large Investment, High Risk
• Developing Nations - SOE’s
vs Developed Nations
• Centralized Monitoring is
required
• Increasing competition to
be used as an advantage