Privatization of economic development

1. IMPACT OF PRIVATIZATION
ON
ECONOMIC DEVELOPMENT
GROUP 16 OF FOUNDATION COURSE
Presentation Title 1
CHIRAG JAIN: BAF 21088
PRATHAM KOTHARI: BAF 21099
SHRUTI GUPTA: BAF 21113
VAISHNAVI MALUSARE: BAF 21071
YASH CHAVAN: BAF 21131
NEERAJ CHAVRI: BAF 21135
YASH KAVTE: BAF 21140
VANESH SHIRGUDI: BAF 21122

2. IMPACT OF
PRIVATIZATION ON
ECONOMIC
DEVELOPMENT
Group 16

3. Parts of this
Presentatio
n
• About our topic
• How Privatization affects
Economic Development
through Different sectors
• Privatization & Economy
in India
• Conclusion & references
9/3/20XX Presentation Title 3

4. What is Privatization?
The transfer of ownership, property or
business from the government to the private
sector is termed privatization. The
government ceases to be the owner of the
entity or business. For example, if an
individual or organization purchases all the
stock in a publicly-traded company, that
effectively makes it private, so that process is
sometimes described as privatization
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5. What is Economic Development?
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Economic Development is the creation of
wealth from which community benefits are
realized. It is more than a jobs program,
it’s an investment in growing your
economy and enhancing the prosperity
and quality of life for all residents.
“Economic development” means to you
will depend on the community you live in.
Each community has its own
opportunities, challenges, and priorities.
Your economic development planning
must include the people who live and
work in the community.

6. Privatization &
Economic
Development

7. Free enterprise has enabled the
creative and the acquisitive urges
of man to be given expression in a
way which benefits all members of
society. Let free enterprise fight
back now, not for itself, but for all
those who believe in freedom
- Margaret Thatcher
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8. Privatization
The process of privatization can be
successful way to bring about
fundamental structural change by
formalizing and establishing
property rights, which directly
creates strong individual
incentives. A free market economy
mainly depends on well -defined
property rights in which people
make individual decisions in their
own interests. According to
experts, privatization may improve
efficiency, provide financial relief,
boost wider ownership, and
increase the availability of credit
for the private sector .
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9. Micro Economic Advantages
• State owned enterprises generally are outdone by the private
enterprises competitively. When compared the latter, it shows better
results in terms of profits and efficiency and productivity. Therefore,
privatization can provide the necessary push to the under performing
PSUs( public sector undertaking).
• Privatization brings about fundamental structural changes providing
momentum in the competitive sectors.
• Privatization leads to implementation of the global best practices
along with management and motivation of the best human talent to
foster sustainable competitive advantage and improvised
management of resources.
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10. Macro Economic Advantages
• Privatization has a positive impact on the financial growth of the sector
which was previously state dominated by way of decreasing the deficits
and debts.
• The net transfer to the State owned Enterprises is lowered through
privatization
• It helps in escalating the performance benchmarks of the industry in
general.
• It can initially have an undesirable impact on the employees but
progressively in the long term, shall prove advantageous for the growth
and prosperity of the employees.
• Privatized enterprises provide better and quick services to the clients
and help in improving the overall infrastructure of the country.
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11. Educational Advantages
• Accessible Education: There is a massive increase in
the number of schools and educational institutions
across the country.
• Improved Infrastructure: Undoubtedly, private sector
has made remarkable infrastructure changes and has
replenished state of the art framework.
• Advanced teaching: They have introduced modern
techniques of teaching, which helps children in better
learning and increase their performance.
• Liberty to choose institution: Increase in number of
schools and colleges have provided parents with a
variety of options to choose from.
• Extracurricular activities: Every private school
nowadays comes up with new and interesting activity
ideas that help a child to learn new things and become
active in all aspects.
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12. How privatization affects the banking
sector
• The studies reviewed by Clarke, Cull, and Shirley (2005), which focus on developing
countries find that bank performance usually improved after privatization.
• But that this pattern was not common across countries; environmental factors also played a
role
• Evidence suggests that performance improves more when the government fully relinquishes
control; when banks are privatized to strategic investors rather than through share issues;
and when bidding is open to all, including foreign banks.
• Finance Minister Nirmala Sitharaman, in the budget speech of 2021-2022 announced
privatization of two PSBs as a part of its disinvestment plan. Some of the benefits are:
1.Macroeconomic stability post-COVID
2.Administrative efficiency and quality of customer service
3.Competition
4.Capital infusion and foreign investment
5.Job creation
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13. Disadvantages
Though privatization has numerous advantages, it has some
disadvantages too
• Private sector mainly focuses more on profit maximization and less on social
objectives dissimilar to public sector that initiates socially viable adjustments in case
of emergencies and criticalities
• Privatization has provided the unnecessary support to the corruption and unlawful
ways of accomplishments of licenses and business deals amongst the government and
private bidders. Bribery are common issues
• Privatization intensifies prize inflation in general as privatized enterprises do not get
government subsidies after the deal and the burden of this inflation affects the
common man
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14. Disadvantages of Privatization of Education
• Disparity in public and private schools : Private sector has
raised the bars of their school standards too high that
government schools are unable to match up to their
benchmarks.
• Pricey Fee Structures
• More of a Business : The focus of private schools has
shifted from providing education to earning money.
• Discrimination : In order to maintain a standard, these
institutions strictly avoid admission of people from poor
families
• Lack of trained teachers : Quality of education is a
complex issue and is difficult to measure and it has not
been certain of any specific method that can provide
quality education.
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15. Disadvantages of Privatization of Banks
• Difficulty of profit and finance: the government aims to sell the less
profitable companies. The private sector is unwilling to purchase an
acceptable amount from the government
• Resistance from employees
• Indecent working and high priced economy. The private sector is
uninterested in cost reduction or quality production.
• Economic Power and dependence on government. The dominance
of a few business groups concerning capital and goods is a socio
economic problem that harms the consumers and society.
• 5 Unguaranteed success. Privatization is unguaranteed in terms of
success rates of any individual unit to which many private sector
units suffer huge losses
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16. Successful privatizations
in India
• Air India was recently taken over Tata after it was nationalized in 1953
• Modern Foods
• Maruti Udyog
• Bharat Aluminum Company (BALCO)
• CMC
• Hindustan Teleprinters
• Indian Petrochemicals
• Jessop and Co
• Lagan Jute Machinery
• Paradeep Phosphates
• Videsh Sanchar Nigam Ltd (VSNL)
Presentation Title 16

17. Companies under
Privatization
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• Lagan Jute Machinery Company
Limited
• Videsh Sanchar Nigam Limited
• Hindustan Zinc Limited
• Hotel Corporation Limited of India

18. The story of privatization and de-privatization
of Air India
• The airline was founded by J.R.D. Tata as Tata Airlines in 1932, and
initial service offered a weekly airmail service between Karachi and
Madras via Ahmedabad and Bombay.
• Till 1990 Air India continue to dominate domestic and international
airline traffic. In 2000-01 the national democratic Alliance tried to sell a
minority stake in Air India in order to raise funds
• Post 2000 India started losing its market share in the international Sky
bhai bus domestic private operators were tying up with other
international airlines to offer connecting international flights at lower
costs
• In 2005-06 Air India posted small profit of rupees 16.29 crore while
Indian Airlines reported rupees 49.50 Crore profit. Both the airlines had
combine debt of amount rupees 5000 crore.
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19. • In 2007 the Congress led United progressive Alliance
government decided to merge the two Airlines and ordered
planes worth more than rupees 50000 crore. The national
carrier had to take heavy death to purchase this planes and Air
India never recovered from this loss. Mounting debt and loss in
a domestic and international market, the financial burden of Air
India became possible tangeite the financial burden of 100
aircrafts and loans the airlines debt surged rupees 50000 crore
in 10 years
• In March 2018 the union government issued an expression of
interest to sell 76% Stake of Air India along with Air India
Express and a 50% Stake of Air India SATS airport Services
Private Limited
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20. 9/3/20XX Presentation Title 20
• After 2 unsuccessful attempt the
government decided to sell hundred
percent share of airline released the
EOI to invite bidders in 2020
• The bidders that remained fore front
work Tata Group and Ajay Singh of
SpiceJet
• Air India will be transferred to its new
owner the TATA Group by the third
week of January 2020

21. Concluding Advantages
• Reduced Government Debts
• Improved Ser vices
• New Kind of Products – This helps in mixing creativity
with private making and it also benef its the consumers
greatly.
• No Political Interference – With the shift from the public
sector to the private sector, the interference of the
political parties has been stopped in various industries.
• Competitive Rates – In the industries where the
competition is high, the customers get the advantage of
getting better ser vices at lesser rates.
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22. Conclusion
To conclude, its quite evident that
privatization has its own advantages
and disadvantages depending on
the sector, the economic condition
and more things
Thus, both public sector and private
sector is important for the economy
to sustain.
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23. References
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• https://www.civilserviceindia.com/curr
ent-affairs/articles/privatisation-and-
india-economy-growth.html
• https://www.vedantu.com/commerce/
privatisation
• https://timesofindia.indiatimes.com/re
adersblog/blogs/impact-of-
privatization-on-a-country-2844
• https://wol.iza.org/articles/effects-of-
privatization-on-exports-and-jobs/long

24. Thank you
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Thank you for your
precious time hope
you now know how
privatization works :)