PRIVATIZATION

SEMINAR BY,

Lekshmi Chithra R
 INTRODUCTION

 Privatization may be defined as the transfer of

the public sector activities and functions to the
private sector.

 Applies to the commercial and industrial

enterprises which are often owned, managed
and implemented by the public sector which
could otherwise be operated by the private
sector.
 OBJECTIVES
 To improve the performance of Public Sector
Undertakings so as to lessen the financial
burden on taxpayers.

 To increase the size and dynamism of the

private sector.

 To encourage and to facilitate private sector

investments, from both domestic and foreign
sources.
 To generate revenues for the state.

 To reduce the administrative burden on the

state.

 Launching and sustaining the transformation

of the economy from a command to a market
model.
 TYPES

 Ownership measures:
• Total denationalization.
• Joint venture.
• Liquidation.
• Workers co-operative.

 Operational measures:
• Incentives are granted to workers.
 BENEFITS

 Reduces the fiscal burden of the state and

reducing the size of the bureaucracy.

 Helps the state to trim the size of the

administrative machinery.

 Enables the government to concentrate more

on the essential state functions.

 Better management of the enterprises.

 Helps accelerate the pace of economic
developments by attracting more resources
from the private sector for development.

 Encourages entrepreneurship.

 Increase the number of workers and common

man who are shareholders.
 DRAWBACKS

 Expensive and generates a lot of income in fees

for specialist advisers such as banks.

 The nationalized industries were sold off too

quickly and too cheaply.In almost all cases the
share prices rose sharply as soon as dealing
began after privatization.

 The privatized businesses have sold off or

closed down unprofitable parts of the business
and so services.
 CONCLUSION
 Privatization is an inevitable historical reaction
to the indiscriminate expansion of the state
sector and the associated problems.

 Even in the ‘communist’ countries it became a

vital measure of economic rejuvenation.