1. BY: Ashutosh Gupta Krishan Kumar
TECNIA INSTITUTE OF ADVANCE STUDIES
ROHINI, NEW DELHI 
Presentation On
TRENDS IN PUBLIC & PRIVATE SECTOR IN INDIA.
BY: Ashutosh Gupta Krishan Kumar

2. Acknowledgement
We hereby acknowledge the fact that making of this presentation has given us knowledge about the topic “Trends in Public & Private Sector in India”.
We are grateful to our Business Environment teacher who is also our Dean Academics Mr. Ajay K Rathore Sir for giving us an opportunity to prepare a presentation over this topic and the help he provided to us to complete this presentation successfully.
And last but not the least We’re Thankful to our classmates for the cooperation they’ve extended to us in completion of this presentation.

3. CONTENTS: Introduction Public sector: Objectives, Growth & Performance
Private Sector: Objectives & Growth
Comparisons: Public v/s Private Sectors
Share in Gross Domestic Savings.
Share in Gross Domestic Capital Formation.
Share In Employment Source.
Defects: Public Sector & Private Sector
Positive Aspect of Private Sector
Conclusion
References

4. Introduction Public Sector
A public sector enterprise is an organisation which is
Owned by public authorities including Central, State or Local authorities, to the extent of 50% or more;
Is under the top managerial control of owning public authorities
Is established for the achievement of a definite set of public purpose
Is consequently placed under a system of public accountability
Is engaged in an activity of business character
Private Sector
A private sector enterprise is an organisation which is owned, managed & controlled by private individuals or a group of individuals or both. It is also engaged in business activity but with the motive of profit maximisation rather than public service like in case of public sector enterprise.

5. Objectives of Public Sector Enterprise:
Helps in rapid economic growth & industrialisation of the country & creation of necessary infrastructure for economic development,
To earn return on investment & thus generate resources for development,
To promote redistribution of income and wealth,
To create employment opportunities,
To promote balanced regional development,
To promote import substitution, save and earn foreign exchange for the economy
Acts as a countervailing force and put up an effective competition to undertakings in private sector and
To gain control over the commanding heights of the economy.

6. Growth of Public Sector Undertakings
Period
Total Investment (Rs. Cr.)
No. of Enterprises
(Owned By Central Gov.)
1st Plan ( ) 29 5
2nd Plan ( ) 81 21
3rd Plan ( )
953 48
Three Annual Plans
( )
2410 73
4th Plan ( )
3902 85
5th Plan ( )
6237
122
6th plan ( )
18225
186
7th plan ( )
42811
221
8th plan ( )
118492
237
9th Plan ( )
201500
238
10th Plan ( )
324632
240
11th plan ( )
4,21,089
244
Source: Business Environment by Francis Cherunilam (2008)

7. Reasons of growth of Public Sector
The Industrial Policy Resolution of 1956 enlarged the role of the public sector.
Schedule A to the Resolution enumerated 17 industries, the future development of which would be the exclusive right of the state.
Schedule B to the Resolution contained a list of 12 industries which would be progressively state owned & in which the state would, therefore, generally take the initiative in establishing new units.
The Industrial Policy of 1956 is the basic policy of India. It was more of a restrictive in nature for setup of new private industries. The Public Sector flourished in the time being before the introduction of new Industrial Policy of 1991 which was more liberal in nature.

8. Share of Public Sector At Current Prices it accounted for:
7.5% of Net Domestic Product in ,
25% of Net Domestic Product in
It also accounts for:
One-fourth of Gross Domestic Product (GDP),
One-third of the Exports.

9. Six Indian Public Sector companies figure in the latest list of the 500 biggest industrial corporations, released by Fortune International. They are:
Name of Company
Ranking (Out of 500)
Indian Oil Corporation
144
Oil & Natural Gas Corporation
278
Steel Authority of India Ltd.
332
Hindustan Petroleum Corp. Ltd
371
Coal India Ltd.
Bharat Petroleum Corp. Ltd
474
Source: Essentials Of Business Environment by K. Ashwathappa (10th edition 2008)

10. During April-September
Performance of Central Public Sector Enterprises, during April-September, 2006
Sl.
No.
Industry
GDP
Nominal
Growth
During April-September
2005
2006
Rate 1.
Agriculture, forestry and fishing
253839
277668
9.39 2.
Mining and quarrying
37935
43487
14.65 3.
Manufacturing
242452
278986
15.07 4.
Electricity, gas and water supply
32933
35608
8.12 5.
Construction
101494
116667
14.95

11. Performance of CPSEs, during April-September, 20066.
Trade, hotels, transport and communication
366780
426935
16.40 7.
Financing,
insurance, real
estate and
business
Services
222882
254923
14.38 8.
Community, social and personal services
211655
239039
12.94
GDP at factor cost
13.83

12. Objectives of private sector enterprise:
The government resorts to privatisation with the multiple objectives which are as follows:
To reduce political interference in the management of enterprise, leading to improved efficiency & productivity,
To provide adequate competition to the public sector,
To generate cash in order to fund the ever-increasing expenses,
To reduce the concentration of economic power in the country.

13. Growth of Private Corporate
Sector
1957
1971
2000
No. of Companies
29,357
30,322
5,42,308
Government 74
314
1,257
Private
29,283
30,008
5,41,051
Paid Up capital (Rs. Cr.)
All Companies
1,080
4,500
2,67,898
(100.00)
Government Companies 70
2,060
95,842
(6.8)
(45.8)
(35.8)
1,010
2,440
1,72,056
Companies
(93.2)
(54.2)
(64.2)
Note: Figures in brackets are percentage of total paid-up capital
Source: Tata Services Ltd, Statistical Outline of India ( )

14. Reasons for Growth of Private Sector
Political will towards privatisation.
Financial Reforms,
Usage of more advanced technology,
Young & large English Speaking class.
Opening up of Indian Economy has led to free flow of FDIs along with modern cutting edge technology.

15. Share of Private Sector
Accounts for 75% of National Domestic Product in
It is estimated that out of the total US $ 15 Billion KPO service business around US $ 12 Billion of business would be outsourced to India by the end of 2010

16. Top 10 Private Sector Companies in 2008
Reliance Industries Limited
Tata Consultancy Services (TCS)
Infosys Technologies Ltd
Wipro Limited
Bharti Tele-Ventures Limited
ITC Limited
Hindustan Lever Limited
ICICI Bank Limited
Housing Development Finance Corp. Ltd.
TATA Steel Limited

17. Comparisons Share In Gross Domestic Savings
Share In Gross Domestic Capital Formation
Employment Provider
Share In National Domestic Product 2002

18. SECTOR-WISE DOMESTIC SAVINGS
(As a %age of GDP)
Years
Household Sector
Private Sector
Public Sector
Gross Domestic Savings 1 2 3 4 5
New Series
(Base: )
1950
5.7
0.9
2.0
8.6
1955
9.0
1.2
2.1
12.3
1960
6.5
1.6
3.1
11.2
1965
1.4
3.6
13.7
1970
9.5
1.5
3.3
14.2
1975
10.9
1.3
4.7
16.9
1980
12.9
4.0
18.5
1985
13.1
1.9
3.9
19.0
1990
18.4
2.7
1.8
22.8
1995
5.0
2.6
24.4
2000
21.6
-1.8
23.7
2005
24.2
7.5
34.3
2007
23.8
7.8
3.2
34.8

19. SECTOR-WISE GROSS CAPITAL FORMATION
(As a %age of GDP)
Year
Public Corporate Sector
Private Corporate Sector
Gross Capital Formation 1 2 3 4
(BASE : )
1950
2.6
6.1
8.7
1955
5.4
6.3
11.7
1960
6.7
5.8
12.5
1965
8.1
6.9
14.9
1970
7.9
13.8
1975
7.4
8.6
16.1
1980
8.9
9.5
18.4
1985
10.7
9.7
20.4
1990
9.6
13.4
23.0
1995
8.3
16.2
24.4
2000
6.5
16.3
22.7
2005
7.0
24.0
31.0
2007
25.0
32.5

20. EMPLOYMENT IN PUBLIC AND ORGANISED PRIVATE SECTORS
In Lakhs
Years
Public Sector
Private Sector
end march
1981
154.8
74.0
1991
190.6
76.8
1995
194.7
80.6
2000
193.1
86.5
2002
187.7
84.3
2003
185.8
84.2
2004
181.9
82.5
2005
180.1
84.5
2006
87.7

21. Agriculture, Forestry & Fishing
Share of Public & Private Sector in Net Domestic Product (Rs. Crores at prices)
At Current Price
S. No
Industry
Public Sector
Private Sector
Total 1
Agriculture, Forestry & Fishing
4,549
2,70,309
2,74,858
(1.7)
(98.3)
(100.0) 2
Mining & Quarrying
16,785
3,863
20,645
(81.3)
(18.7) 3
Manufacturing
21,106
1,27,015
1,48,121
(14.2)
(85.8) 4
Electricity, Gas & Water
18,487
-3,878
14,609
(126.5)
(-26.5) 5
Construction
9,607
46,089
55,696
(17.2)
(82.8)

22. Continued: Sr. No Industry Public Sector Private sector Total6
Trade, Hotel & Restaurants
5,267
1,58,797
1,64,064
(3.2)
(96.8)
(100.0) 7
Transport, Storage & Communications
36,044
30,066
66,110
(54.5)
(45.5) 8
Finance, Insurance, Real Estate & Business Services
47,074
84,453
1,31,527
(35.8)
(64.2) 9
Community, Social & Personal Services
95,509
48,203
1,43,712
(66.5)
(33.5)
2,54,428
7,64,917
10,19,345
(25.0)
(75.0)

23. Defects in Public Sector Enterprises: Leading to Privatisation
Economic Inefficiency- High C.O.P, Inability to Innovate, Cost Delays in delivery of goods produced,
Ineffectiveness in provision of goods & services. E.g. Failure to meet objectives, diversion of benefits to elite group & too much political interference.
Rapid expansion of bureaucracy- Inefficiency of government, problems in labour relations, straining public budget & adverse effects on the economy.
These problems have led many governments to undertake programs of public sector reform, and pushed by a need to curb public expenditure, to revaluate the possibilities for shifting publicly managed activities into the private sector.

24. Defects of Privatisation:
Emphasis on Non-Priority Industries,
Emergence of monopoly power and concentration,
Industrial Disputes,
Industrial Sickness.

25. Positive effects of the growth of private sector in India
Manufacturing registered 11.9% growth.
The passenger vehicles sector grew by 11.61% during April-May 2007.
Electricity, gas & water supply performed well and recorded an impressive growth rate of 8.3%.
Construction growth rate rose to 10.7%.
Trade, hotels, transport and communication registered a growth rate of 12%.

26. Exports grew by 18.11% during the 1st quarter of and the imports shoot up by 34.30% during the same period.
The food sector is estimated to be of US$ 200 billion now and it is expected to grow to $310 billion by 2015.
Financing, insurance, real estate and business services recorded an impressive growth rate of at 11% during the 1st quarter of this fiscal.

27. Conclusion
The debate about the costs and benefits of private or public sector is infinite. It hinges on the economic and political merits of the role of government in society as well as the economics of ownership, and has found supporters on both sides of the policy divide. Interestingly, privatization programmes were started in the 1980s purely "on faith" and not because the policy makers had found conclusive evidence for the superiority of the private sector. Though the sponsors of private ownership are in ascendance now, the state ownership was considered the most successful economic policy only a few decades ago. However, the studies do show that only those mismanaged public enterprises could generate favourable budgetary impact, which were sold at competitive prices to buyers who could improve their performance and fully realise their market potential. The public sector inspite of its defects is a driving force for private sector in India because it’s the public sector that takes initiatives to develop infrastructure. There have been declines in performance of public sector companies but we should never forget that they provide the foundations to the private sector.

28. Continued:
The acceleration in growth in the past five years or so is largely driven by the private sector. We are not only reaching the South-East Asian levels of saving (32.4 per cent) and investment (33.8 per cent) rates but the private sector has played a major role in generating these savings and investment Though privatization alone may not be the sole reason for improved efficiency, there is no denying the fact that competition and regulation would have remained elusive and of academic value in developing countries economies without the emergence of a potent and assertive private sector. The fact is that the private sector is superior in terms of efficiency and cost effectiveness only where the regulators have ensured a competitive market. Higher the degree of competition, greater the resilience and efficiency level of the private sector. However, we must not forget that due to the inherent trade off between equity and efficiency, the private sector, compared with the public sector, would opt for efficiency that can be translated into profit - its primary motive for survival.

29. References: Datt & Sundaram (2005): “Indian Economy”
Dhingra I.C. (2005): “Indian Economy”
Sheikh Saleem (2006): “Introduction to Business Environment”
Ashwatthapa. K (2006): “Essentials of Business Environment”
Cherunilam Francis (2008): “Business Environment”
Websites of: Reserve Bank Of India
Ministry of Commerce
Ministry of Information & Broadcasting
Central Statistical Organisation