Privatization

Presented by:
Murugesh Kumar.D
N

Likhith
 Contents
 Definitions.
 Objectives.
 Routes to privatization
 Disinvestment.
 Arguments against privatization.
 7 sins of Privatization.
 Conclusion.
Definitions:
 Privatization is the incidence or process of transferring
ownership of a business, enterprise, agency or public service
from the public sector (government) to the private sector
(business). In a broader sense, privatization refers to transfer of
any government function to the private sector including
governmental functions like revenue collection and law
enforcement.

 Privatisation is the process whereby activities owned &

operated by government are transferred to private hands to
improve efficiency quality and innovation.
 Objectives
 Improve PSUs
 Encouraging & Facilitating Private sector
investments.
 Reducing administrative burden on the
State.
 Popularizing Private sectors.
Routes or Measures:

1.Sale to outsiders.
2. Management-Employee Buy-out.
3.Equal-access Voucher privatization.
4.Spontaneous privatisation.
 Disinvestment

 Definition:
“The action of an organisation or
government selling or liquidating an asset or
subsidiary "is called disinvestment
 Overview of India's
disinvestment
 Disinvestment policies introduce after new economic policy in
july – 1991

 The disinvestment policy as an active tool to reduce the burden to

financing the PSU

 NIF (National investment fund)

 Government has a borrowing plan of 4,00,000cr roughly 2,45,000 cr

would raised through OMO
 1991-92 31 PSU were disinvested and
collected amount 3038
cr

 1991-01 20506 cr were collected through

disinvestment policy

 1991-96 12,300 cr was generated 7300 cr was

used to fiscal deficts
 UPA government received 47,901cr from investment of
equity in PSUs

 2004-05 4424cr
 2005-06 1581cr
 2006-07 534cr
 2007-08 38,785cr
 2008-09 2,567cr

 UPA government is plan to generated 1120cr from

disinvestment in 2009-10
 Obstacles
 Selling of least Profitable Enterprises.

 Divestiture tends to arouse political

opposition.

 Undeveloped markets.
 7 Sins of privatization
1. For the wrong reasons.
2. In the wrong time.
3. With non-transparent procedures.
4. Only to finance budget deficits.
5. Poor financial strategy.
6. Unrealistic labour strategies.
7. Political consensus.
Thank you