This document discusses the evolution of privatization in India. It defines privatization as the transfer of ownership or management from public to private sector. Privatization was introduced under Rajiv Gandhi but accelerated under P.V. Narasimha Rao and the new economic policy of 1991. The government uses strategic sales, joint ventures, and public share offerings to privatize public sector enterprises. Privatization aims to reduce the government's financial burden, increase competition and efficiency, but it may also lead to lack of social responsibility and loss of jobs. Examples provided include the privatization of LJMC and VSNL.

1. EVOLUTION OF BUSINESS
& INDUSTRY IN INDIA
PRIVATISATION

2. CONTENTS
o Introduction
o Modes of Privatisation
o Modes of Privatisation by Government
o Reasons for Privatisation
o Problems of Privatisation
o Examples
o LJMC
o Conclusion

3. PRIVATISATION
 Transfer of Ownership from Public to
Private sector
 Transfer of Management of an
Enterprise from Public to Private sector
 Transfer of Government assets or
functions to Private sector

4. PRIVATISATION
 Privatisation was introduced by Rajiv
Gandhi during the eighties
 P. V. Narasimha Rao (PM) gave actual
speed by introducing the New Industrial
Policy
 In July 1991, new economic policy was
introduced i.e LPG

5. Modes of Privatisation
 Sale of an enterprise
 Lease of entity
 Joint ventures
 Public share offers

6. By Government
 Strategic sale by auction method
 Generous pay & benefits
- At lower levels in particular
- Overtime
 Offer of shares through a Public
offering both domestic and global, which
may or may not involve a change in
ownership/management

7. Reasons/Advantages for
Privatization
 To reduce the burden on Government
 Strengthen competition
 Improve Public finances; Profits
 To fund infrastructure growth
 Accountability to shareholders
 To reduce unnecessary interference
 More disciplined labour force
 Industrial growth

8. Problems/Disadvantages in
Privatisation
 Ownership to a privileged few
 Labourers would be at the mercy of the
private owners
 Cost and Ignorance factors
 Lack of Social Responsibility
 Takeover Threat
 Loss of experienced managerial expertise
 Short-term gain, Long-term loss
 Ignores the National importance

9. Examples of Privatisation in India
 LJMC – Lagan Machinery Company Limited
 VSNL – Videsh Sanchar Nigam Limited
 HZL – Hindustan Zinc Limited
 HCL – Hotel Corporation Limited of India
 BALCO – Bharat Aluminium Company
Limited

10. LJMC
 LJMC was fully set up as a jute
manufacturing company
 The Government of India had 100% stake
 In 1996, the turnover was declining
 LMJC was approved for Privatisation in 1997
 It was privatised through a sale of 74% stake
to M/s Murlidhar Ratanlal Exports Ltd. In 2000
 The performance post-privatisation drastically
increased and made profit

11. Does privatisation create
or decrease jobs?

12. Jeffrey Sachs, director of Harvard University’s
centre for international development and a
noted economist, pointed out that the reform
process in India had a long way to go. He feels
that “without a focus on the “twin pillars” of
social and economic strategies, the future
would be bleak for India, especially in the
context of competition all around.”

13. CONCLUSION
Success of the economic reforms
depends upon the commitment of all
concerned –
people,
political parties,
bureaucracy and
the government
to the socio economic progress of the
country

14. THANK
YOU!