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Privatization

Privatization involves transferring ownership of public sector businesses and services to private entities. It aims to reduce government involvement in commercial activities, increase efficiency of service delivery, and provide more competition and choice for consumers. Examples include toll roads, ports, and banks being privatized. Six industries are reserved for the public sector: cigarettes, Indian railways, chemical fertilizers, arms and ammunition, atomic energy, and hazardous chemicals. Privatization can improve efficiency through profit incentives but there may be less focus on rural areas and job losses. It also allows for more competition but private entities primarily aim to maximize profits.

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318 views6 pages

Privatization

Privatization involves transferring ownership of public sector businesses and services to private entities. It aims to reduce government involvement in commercial activities, increase efficiency of service delivery, and provide more competition and choice for consumers. Examples include toll roads, ports, and banks being privatized. Six industries are reserved for the public sector: cigarettes, Indian railways, chemical fertilizers, arms and ammunition, atomic energy, and hazardous chemicals. Privatization can improve efficiency through profit incentives but there may be less focus on rural areas and job losses. It also allows for more competition but private entities primarily aim to maximize profits.

Uploaded by

Rohan Srivastava
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Privatization

Privatization is the process of transferring


ownership of a business, enterprise, agency,
public service or public property from the
public sector to the private sector.
The business that operates for a profit or nonprofit organization.

WHY PRIVATIZATION?
To reduce government involvement in
commercially viable activities
Increase efficiency in the delivery of
programs and services
Provides competition in market place
which transfers the lower price and
greater choice for the consumers.

Some of the examples of privatization

Toll roads, bridges and airport:


A significant developments in public private
partnerships is the lease of toll roads, bridges, and
tunnels by state and local governments to private
contractors.
Government could not do in 50 add years,
privatization did in just 4-5 years.
Mundra port in Gujarat has became a highly efficient
and well managed major port in 10 years
When compared to the Kandla in Mumbai working as
port for more than 50 years.
ICICI bank is the countrys largest private bank in
second place after the SBI
SBI existing in more than 100 years, on the other
hand.

Six industries which are not reserved for private sector

Cigarette

Indian railways

Chemical Fertilizers Arms and Ammunition

Atomic energy

Hazardous Chemical

Private Sector
Improved Efficiency
Private company have a
profit incentives to cut
costs and be more efficient.
Less Political interference
Long term view
Increased Competition
For example, there is now
more competition in
telecoms and distribution
of gas and electricity.

Public Sector:
Comparatively less efficient
government run industry,
managers do not usually
share in any profits hence
less motivated
More political interference
Government companies can
be motivated by political
pressures rather than
sound economic and
business sense.
Short Term View
A government many think
only in terms of next
election.
Less competition involved

Disadvantages of privatization

Theprivatecompanies dont like to have their branches in


rural areas.
Their services remain confined to cities where sufficient
clients are available.
Problem of unemployment
Investment in industries of comfort and luxurious products
instead of necessary products and problem of optimum use
of capacity
Aims at making profit which adversely affect the interest of
the community

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