Presentation based on privatization.

1. BUSINESS ENVIROMENT
PRESENTED BY : AMOL HANSARAJ RATHOD
ROLL NO. 27
GUIDANCE : PROF. LALIT BHOLE SIR

2. TABLE OF CONTENT
 Introduction
Meaning of Privatization
 Objective of Privatization
Advantages and Dis-Advantages of Privatization
 Examples of Privatization
Conclusion

3. INTRODUCTION
 The world privatization appeared in Directly in 1983 and defines narrowly as
"to make private especially to change from public to private
control or ownership".
 Privatization is act of reducing the role of goverment or increasing the role
of priivate sector in activities.
 Privatization was introduced during the eighties by Rajiv Gandhi and The
government of P.V. Narsimha Rao gave actual speed by introducing the
New Industrial Policy.

4. Introduction
MEANING
Privatization is the process of transferring ownership of a
Business, Enterpise, Agency, Public service or Public
property from the Publuic sector to the Private sector.
The business that operate for a profit or non-profit
organization.

5. OBJECTIVES
To increase efficiency and competitive power of the enterprises.
To strenthen the industrial management.
To strenthen the industrial management.
To strenthen the industrial management.
To acheive repid industrial development of the country.
To acheive repid industrial development of the country. Providing strong momentum
for the inflow of FDI
Improving the efficiency of public sector undertakings (PSUs)

6. Out of 16 industries, 5 industries are not reserved for
private sector. They are
Chemical
fertilizers
Hazardous
chemicals
Cigarette Atomic
energy
Indian
railways

7. ADVANTAGES
• 1. Financial Resources : The main advantage of privatization is to generate financial resources for the
government to generate resources disinvestment of public sector enterprises.
• 2. Optimum Utilisation of Resources : It has been observed that the public sector has failed in the
optimal use of national resources.The private sector may succeed in the optimum use of resources by
maintaining efficiency.
• 3. Fostering Competition : Most of the public enterprises enjoy the status of monopoly.It results in
inefficiency and losses.Privatization creates a situation of competition for public enterprises and they are
forced to improve their efficiency.
• 4. Reduce Fiscal Burden : Privatization reduces the fiscal burden of the state by relieving it of the
losses of the public enterprise and reducing the size of the bureaucracy.
• 5. Economic Democracy : Privatization helps to control government Monopoly.It helps to attract more
resources from the private sector.It emerges from economic democracy by private participation in the
economic sphere.
• 6. Better Industrial Relations : Privatization may increase the number of workers and the common man
who are shareholders.This could make the enterprises subject to more public vigilance.

8. ...Continue....
• 7. Reduction in Political Interferences : The process of privatization reduces political
interferences in the public sector enterprises by giving more representation to the private sector in the
management of Public Enterprises.
• 8. Reduction in Bureaucracy : Public Enterprises become a synonymous bureaucracy.They
can be made from bureaucracy by the process of privatization.
• 9. More Productivity : The private sector can improve productivity by maintaining efficiency
in its operations.
• 10. Economical : The process of privatization maintains the economy in the operations,
whereas the operations of public Enterprises are costly.
• 11. Individual Motivation : The success of the private sector resides in the profit
motive.Privatization motivates the managers to make efficient in the operations of the
enterprise so that I can earn more and more profits.

9. DIS-ADVANTAGES
•1. Problem of Price : The government usually want to sell the least profitable enterprises, those that the private sector
is not willing to buy at a price acceptable to the government.
• 2. Opposition from Employees : Disinvestment tends to arise political opposition from employees who may lose
their jobs, from politicians who fear short-term unemployment consequence of liquidation of cost reduction by private
owners, from bureaucrats who stand to lose patronage, and from those sections of the public who fear that national assets
are being concerned by foreigners, the rich or a particular ethnic group.
• 3. Problem of Finance : In the developing countries under the developed capital market sometimes makes it difficult
for the government to float shares and for individual buyers to finance the large purchase.
• 4. Improper Working : The main disadvantage of the private sector is that it has fallen much short of what this sector is
capable of or what it has achieved in some other countries.The private sector is not interested in cost reduction and quality
production.
• 5. Interdependence on Government : There has been excessive Regulation and control of the private sector by
the government.This has prevented and competition from becoming a generalized phenomenon of the economy.

10. ...CONTINUE...
• 6. High-Cost Economy : Another problem with the private sector is that its cost, in general, are large and the price of
products are unduly high.Barring a small proportion of companies that are efficient and show a good profitability ratio, many
are insufficient.
• 7. Concentration of Economic Power : The private sector emerges a monopoly and the concentration of economic
power in the hands of few.The dominance of some business groups in terms of capital and assets is an economic and social
problem.
• 8. Bad Industrial Relations : An unfortunate aspect of the private sector is the recurrence of industrial disputes which
hamper the smooth progress of the industries.For several years, there have been larger than in the public sector
• 9. Widespread Sickness : The private sector industries such as Textiles, Engineering, Chemicals, iron, and steel and
people are suffering from the problems of industrial sickness.These industries are facing continuous losses.
• 10. No Guarantee of Success : Privatization is not a guarantee of the success of an individual unit.It has been
observed that many private sector units make huge losses.
• 11. Ambulance Development : Private sector units are influenced in those areas which are most suitable for-profit
purpose.It results in the concentration of individual units in a few areas.Thus, privatization will be harmful to balance
economic development.

11. EXAMPLES
 Bharat Aluminium Company Limited (BALCO)
Modernn Food Industries Limited
Videsh Sanchar Nagam Limited (VSNL)
Hindustan Zinc Limited
Marathi Udyog Limited (MUL)
Hotel Corporation of India Limited (HUL)
Paradeep Phosphate Limiited (PPL)
Grand Ashok, Delhi and Banglore units of ITDC limited

12. BSCS was privatized today it is owned by
Reliance energy
Hindustan and Bharat petroleum planning
to be a part of Oman oil company to have a
great supply of oil to India in lower price.

13. CONCLUSION
It is important to realize that privatization is not a panacea for the ills of is of the public sector.In
countries where the market functions poorly and enterprises are still vulnerable to arbitrary
government edicts, transferring ownership to the private sector is unlikely to achieve much.It merely
transfers the ownership of rents from the public to the private sector.
Similarly, creating private monopolies without an effective system of monitoring and controls opens
up the danger of exploitation of consumers.
Indeed, changing the culture by providing adequate training for new entrepreneurs, for example, or
ensuring a competitive environment is probably more significant than changing ownership.
And if the enterprise is still a monopoly after privatization, as is often the case with utilities, it must
be subject to suitable controls, otherwise, inefficiencies and Monopoly power will merely be
transferred to the private sector, with the costs being borne by consumers or monopolistic
exploitation by efficient private owners replaces the inefficiency of public ownership.