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Evolution of Indian Business Through Privatisation
- 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!