Out Lines Of Pubic
• Public sector
• Objectives of public sector
• Private sector
• Objectives of private sector
• Arguments for privatisation
• Key Obstacles to privatisation
A public enterprise is an organization which is
• Owned by public authorities including central
state or local authorities to an extent of 50%
• It is established for achievement of a defined
set of public purpose, which may be
multidimensional in character.
• To help in rapid growth and industrialization
and create necessary infrastructure for
• Promote redistribution of income & wealth
• Create employment opportunities
• Promote regional balance development
• Basic Infrastructure (Roads , Railways,..)
• The part of the economy that is not state
controlled, and is run by individuals and
companies for profit.
Objectives Of Private Sector
• To earn the highest profits
• Fulfil the desires of the shareholders and it
will always aim to fulfil their satisfaction.
• To increase the market shares to get a
sustainable competitive advantage
• Privatisation Transfer of ownership and
control of an existing public sector enterprise
,activity or service to the private sector.
Privatization may be full or partial. It may be
selective i.e., Some function are transformed
to the private sector, which other are retained
in public sector.
Objectives of privatisation
• To improve the performance of CPSU’s (central
public sector undertaking) so as to lessen the
financial burden on tax players.
• Increasing the size and dynamism of the
• Generating revenues for the state.
• Reducing the administrative burden on the
Arguments For Privatisation
• The ability of the public enterprises to
improve their management system and to
respond to the challenges of globalisation.
• The inability of government to sustain long-
term funding of losses of public sector
• The inability of public sector generate, obtain
and invest adequate funds in a timely manner,
for expanding their infrastructure.
Arguments For Privatisation cont
• The compulsion of governments to raise
resources for balancing government
• Raising expectations of tax payers and
consumers from government system to reduce
taxes and improve services.
key obstacle to privatization
• Lack of strong and high level political
commitment to the privatization program
• Inappropriate design of privatization strategy
( eg. In term of scope, technique
sector and institutional capability of the
• Unclear and weak institutional frame work-
decentralized or centralized.
key obstacle to privatization cont
• Underdeveloped capital markets
• Lack of proper preparation of enterprise for
privatization or diverstiture
Eg. Accounting and auditing , treatment of
losses, social and environmental safety net
• Privatisation is not the only way to put the
CPSEs (Central Public Sector Enterprise) on the
• Nepotism and corruption even among private
• Before planning for further privatisation, India
needs better governance, responding and
quality judicial system.