Please enable JavaScript.
Coggle requires JavaScript to display documents.
Privatization in India - Coggle Diagram
Privatization in India
What is Privatization?
Opposite of nationalization
Privatization of Central PSEs
Government ceases to be the owner
Air India sold to Tata group
Transfer of ownership, property, or business from the government to the private
Other meanings
Private entities execute government plans
Statutory restrictions are lifted
Features of Privatization
State dominance is reduced
Protection to private sector
Establishing economic democracy
Various Objectives
To generate resources for a deficit budget.
For the globalization of domestic Industries.
To invite foreign capital (FDI).
To earn foreign currency through export promotion.
To free the government from Loss-making Enterprises.
Methods of Privatization
Dilution of Capital
Private Placement
Management Employee Buyout
Public Flotation of Shares
Mass Privatization
Competitive Bidding
Advantages offered
Job creation
Efficient utilization of Resources
Growth in domestic and private investment
Reduction of government monopoly
Healthy competition in the economy
Loss-making industries generates revenue
Provides opportunities for private players
Limitations
Fragmentation due to loose or no regulation
May not cater to vulnerable and marginalized sections
Focus on profit rather than social sectors
Certain strategic sectors cannot be privatized
Creating a monopoly market which may lead to nationalization
Indian Case
Privatization of Railways
Privatization of Public sector enterprises
Privatization of Public sector banks
Privatization vs disinvestment
Privatization is when the entity is completely handed over to a private company
Privatization>50%stakes sell> Disinvestment
Disinvestment happens when a government sells only a part of its stake