This document discusses privatization, including what it is, the modes of privatization, and reasons for and problems with privatization. Privatization involves transferring ownership or management of public sector enterprises to private entities. It can be done through various modes such as sale of assets, leasing, or public share offerings. Reasons for privatization include reducing the government's financial burden and improving efficiency. Potential problems include loss of jobs and experienced managers. The document examines alternatives to full privatization and strategies for addressing social impacts.

1. Privatization
Krunal shah
14sa215
Clg : smaid

2. Issues in Privatization
 What is privatization?
 What are the modes of privatization?
 What are the reasons for privatization?
 What are the problems of privatization

3. What is privatization?
 Transfer of ownership from the Public to Private sector.
 Transfer of Management of an Enterprise from the Public
to Private sector.
 Withdrawal of the State from an Industry or Sector
PARTIALLY or FULLY.

4. Another Dimension of Privatization
 Opening up of an industry that has been reserved
for the Public sector to the Private sector
including governmental functions like revenue
collection and law enforcement.

5. Modes of Privatization
 Sale of an Enterprise
 Privatization a global phenomenon
 Improves operating and financial performance
 Lease of Entity
 Joint ventures
 Public share offers:

6. The methods of Privatization
adopted 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 for Privatization
 To reduce the burden on Government
 To strengthen competition
 To improve Public finances
 To fund infrastructure growth
 Accountability to shareholders
 To reduce unnecessary interference
 More disciplined labor force.

8. Problems in Privatization
 Ownership to a privileged few
 The payer could suffer while public
assets get sold off.
 Ownership would be transferred from
public hands to the private firms
 Restructuring
 Timing and menu of options
 Social Safety Net
 Severance, retraining, public works

9. conti…
Managing the Process
 Consultation and participation
 Laborers would be at the mercy of the private
owners
 Loss of experienced managerial expertise
 Short-term gain, Long-term loss

10. Alternatives to total
privatization
 Public Utility: The enterprise can remain as a
public utility
 Non-Profit: The enterprise could be managed by
a private non-profit organization.
 Bankruptcy: State can wait until the enterprise
becomes bankrupt.

11. Accomplishments of Privatization
 The best way to rebuild weakened
Public sectors.
 Stops loss making public sector from
adding to government debt.
 Raises more money for government
through taxing.
 Expands an enterprise and an
industry.
 Creates more jobs and generating
wealth for the country.

12. Timing and Sequencing of Labor
Restructuring
Options Pros Cons
• Leave to
private sector
• Market based
• Speed
• Political/social
considerations
• Lower value
• Restructure
first
• Dispute
settlement
•Safety net
• Delays
• Wrong results
• Mixed
approach
• Pragmatic
• Joint decisions
• Complicates
negotiations

13. Social Safety Net Options
Options Pros Cons
• Severance pay • Income support
• Compensation
• High returns
•Cost and financing
• Adverse selection
• Retraining/
redeployment
• Investment in human
capital
• Politically and
socially desirable
• Mixed expce.
• Inst’l demands
• Weak labor mkts.
• Public works • Temp empt.
• Basic infrastr.
• Dependence
• Sustainability

14. Aim of Privatization
The aim of privatization is :
To achieve higher micro-economic efficiency and foster
economic growth, as well as reduce public sector
borrowing requirements through the elimination of
unnecessary subsidies.

15. Notable privatizations
 The largest privatization in history was Japan
Post because it was thought to be an
inefficient and a source for corruption.
 Japan Post was often said to be the largest
holder of personal savings in the world.
 Nippon Telegraph and Telephone's
privatization in 1987 was the largest share
offering in financial history at the time. 15 of
the world's 20 largest public share offerings
have been privatizations of telecoms.

16. Does Andhra Pradesh Need
more Privatization
 Absolutely! And the sooner the better!
 AP government’s owned enterprises have so far
accumulated losses of Rs.1,984 crores.
 The Losses have to be paid by public taxes today
 Privatized companies become efficient and
profitable, they will start paying taxes instead of
consuming taxes

17. Does privatization
create or destroy jobs?
World bank experts have studied privatizations around the
world and found that in the vast majority employment
increased not decreased.

18. Conclusion
 From the moment we are born, almost all
change is difficult nobody really enjoys change.
 Labors will be initially uneasy, facing problems
with new owners and new ways of working
together changing the habits of a lifetime
always entails some uncertainty and discomfort.
 In order for our economy to grow and for our
children to be freed from debt and allowed to
enjoy greater opportunities Privatization is must
as it will help our state as well as country grow
stronger
 It is not the business of the government to do
business