 Welcome all, myself, Mr. S. K. Kulkarni, assistant professor, Walchand Institute of Technology Sholapur. I am here to discuss with you on topic privatization of infrastructure. Learning outcomes of today's session are, at the end of this session, students will be able to define privatization of infrastructure, they will be able to explain advantages and disadvantages of privatization of infrastructure in India. What is privatization of infrastructure? Dear friends, privatization involves selling state-owned assets to private sector, remember. And when this privatization is said to be done, when government brings in a private organization to build, operate and maintain the state infrastructure. And privatization is appealing for government because it solves numerous short-term budget crunches. Now, which sectors can be privatized? These are few of them are railways, banks, airlines, electricity, health services, etc. There are advantages and disadvantages of privatization. Those are different in different sectors also. Let us see them. There are certain arguments for privatization and against privatization. That means in the favoritism of nationalization. So let us see one after another these arguments. Argument regarding ownership. In privatization, firm is owned by private sector. In nationalization, firm is owned by government. Now, incentives. Under privatization, profit motive acts as incentive for owners and managers, remember. Here is the profit motive. In nationalization, workers may feel motivated if they feel company belongs to them, remember. Now, externalities. Private firm may ignore external costs such as pollution, costs for pollution. But government can put social benefits above profit motive. Then depends on industry. Privatization works well for BT or bill transfer or BOT. And nationalization works well for non-profit services like health care, etc. Remember. Now regarding efficiency. Under privatization, incentive to introduce new technology and increase productivity. And under nationalization, nationalized firms may find it difficult to sack surplus workers. Here this is the main difference. So nationalized firms may find it difficult to reduce the staff, right? Knowledge. Under privatization, private firms employ managers with best skills. And under nationalization, politicians may interfere based on political motives. So these are the two differences in this particular knowledge part. Then natural monopolies. Private monopolies that is water trends may charge high prices when privatization is done. Nationalization. Government can set prices based on social factors. This is the difference here. So in such a fashion, there are certain differences in privatization and nationalization. Now let us see what are the benefits of privatization. If structured properly and sufficiently monitored, privatization can first save tax-price money how by reducing program cost, right? This is the first advantage or benefit, right? privatization can save taxpayers money because program cost will be automatically reduced under privatization. Second increase flexibility. How privatization can replace private firms if it is not meeting contract standards. Cut back on the service, add to service during peak periods or downsize. So this is the flexibility under privatization, right? Then point three, improve service quality. This is obvious. Privatization will definitely improve service quality because competition will be there. Number four, increase efficiency and innovation. This is also very much possible. Efficient work will be there and also they will try to bring innovation. Number five, allow policy makers to steer how privatization allows state officials to spend less time on managing personnel and maintaining equipment thus allowing more time to see that essential services are delivered, right? Then streamline and downsize government is the next point. Privatization is one tool to make bureaucracies smaller and more manageable, right? Then improve maintenance. Large private corporations often sell off assets that are underperforming or proving too difficult to manage efficiently. So this is also important benefit. Improvement in maintenance, right? Now there are certain disadvantages or ill effects also of privatization, which are those first is natural monopoly. A natural monopoly occurs when the most efficient number of firms in an industry is one. So there will be a monopoly of particular industry, right? And this is disadvantage. Public interest, industries which perform important public service that is healthcare, education and public transport cannot run on profit motive. So this is one more disadvantage because healthcare, education, public transport in these sectors profit motive should not be there. Then few more disadvantages are government loses out on potential dividends. This is also one more disadvantage. Innovation of industries, this is again one disadvantage and then issue of accountability will be there. Limited coverage is there for example in case of railways. Lesser inclusive will be the privatization. Then impact will be there on the economy. So these are the disadvantages of this privatization. Dear friends, let us stop while here. Here are few review questions for you, solve them, write your answers correctly. And first question is benefits of privatization are, there are four options. You need to find the correct answer and write it down. Number two, privatization works well for, again there are four options. Then third question is from the discussions up till now imagine and state possible advantages and disadvantages of privatization of railways. That means up till now we have discussed in general the advantages and disadvantages of privatization. Now you should think what will be the ill effects or what will be the advantages and disadvantages of privatization of railways. So write down the answers neatly. Here are the answers. Question number one, D is the correct option, all of these. So benefits of privatization are all of these improved infrastructure, improved service quality, increase in efficiency and innovation. Then question number two, D is the correct option again. Privatization works well for build transfer activities. Then question number three, here are advantages of privatization of railways. First improved infrastructure. Then normalization of prices due to competition, because there will be competition and there will be normalization of prices. Then improved security will be there and better technological innovation will be there. These are the advantages of railways in privatization. What will be disadvantages, limited coverage will be there, because it is not possible to completely cover the entire nation railway sector. Then lesser coverage one and the same thing issue of accountability will be there, who will be held accountable for particular thing and then impact on the economy will also be there. And these are the references for today's session. Go through all these. Thank you.