Apresentation

on“DISINVESTMENT POLICY OF INDIA”

ByNikhil gupta

WHAT IS DISINVESTMENT?

• Disinvestment can be defined as the action of an organisation or government selling or liquidating an asset or subsidiary. It refers to sale from the government, partly or fully, of a government-owned enterprise.

DISINVESTMENT POLICY

WAS ADOPTED IN THE

YEAR 1991 DUE TO

INEFFICIENCIES AND

INCOMPETENCE OF THE

PUBLIC SECTOR UNITS.

New economic policy 1991The new economic reforms of 1991 are also called as• Liberalisation

• Privatisation

• Globalisation reforms

These three are the major reforms introduced during the 1991

economic reforms in order to increase the economic growth rate

and balance of payments.

The Disinvestment policy is a part of the privatisation which is

introduced in the reforms to increase the performance of the

PSUs.

DIFFERENT APPROACHES TO DISINVESTMENT

• Minority Disinvestment: A minority disinvestment is one

such that, at the end of it, the government retains a

majority stake in the company, typically greater than

51%, thus ensuring management control.

• Majority Disinvestment: A majority disinvestment is one

in which the government, post disinvestment, retains a

minority stake in the company i.e. it sells off a majority

stake.

• Complete Privatisation: Complete privatisation is a form

of majority disinvestment wherein 100% control of the

company is passed on to a buyer.

OBJECTVES OF DISINVESTMENT POLICY

• To reduce budgetary deficits.

• To overcome the problem of political involvement in

PSUs.

• Enable the government to concentrate on Social

development.

• To ensure proper planning and execution.

• To overcome the problem of corruption.

IMPORTANCE OF DISINVESTMENT POLICY

• Financing the increasing fiscal deficit.

• Financing large-scale infrastructure development.

• For investing in the economy to encourage spending.

• For retiring Government debt- Almost 40-45% of the Centre’s revenue receipts go towards repaying public debt/interest .

• For social programs like health and education.

CRITICISM OF DISINVESTMENT

• The amount raised through disinvestment from 1991-

2001 was Rs. 2051 crores per year which is too low.

• The way money released by disinvestment is being

used, remains undisclosed.

• Disinvestment of profit making public sector units will

rob the government of good returns.

• Privatization programme is generally not been affected

through the public sales of shares.

• No monopoly is good.

CHALLENGES OF DISINVESTMENT POLICY

• Social Problem

• Political Problem

• Economic Problem

• Lack of transparency

• Lack of co-operation and co-ordination

PHASES OF DISINVESTMENT POLICY

• Phase I –1991-92 to 1998-99

• Phase II –1999-00 to 2003-04

• Phase III –2004-05 to 2008-09

• Phase IV –2009-10 to 2013-14

• Phase V –2014 to current

YearTotal Receipts (Rs. crore)

(Inflation adjusted to 2016 Prices)Year

Total Receipts (Rs. crore)

(Inflation adjusted to 2016 Prices

1991-92 17,314 2004-05 6,614

1992-93 9,868 2005-06 3590

1993-94 0 2006-07 0

1994-95 23,387 2007-08 8,469

1995-96 362 2008-09 0

1996-97 1,399 2009-10 38,748

1997-98 3,143 2010-11 33,881

1998-99 16,624 2011-12 19,418

1999-00 5,512 2012-13 30,507

2000-01 5,261 2013-14 18,304

2001-02 15,131 2014-15 26,901

2002-03 8,662 2015-16 33,690

2003-04 38,611 2016-17 46,246

Disinvestment of Public Sector Units in India

Union Budget 2017: Disinvestment target at Rs 72,500 crore; 3 Rail PSUs to be listed

• Government on February 1st 2017 announced that it will raise Rs 72,500 crore

through disinvestment of PSUs, including listing of three railways PSUs IRCTC,

IRFC and IRCON, and proposed merger and consolidation to create globally

competitive public sector units.

• Finance Minister Arun Jaitley said the government will put in place a revised

mechanism and procedure to ensure time-bound listing of identified CPSEs on

stock exchanges as listing will foster greater public accountability and unlock

their true value.

Latest News about DisinvestmentAfter many years, Centre on course to meet disinvestment target

• For the first time in many years, the Centre is expected to meet its

disinvestment target to rise close to ₹45,500 crore from its disinvestment

programme.

• The figure of Rs.44,500 crore is a revised one of the previously fixed one of Rs.

56,500 crore.

• The total amount of disinvestment in the year 2016-17 was Rs. 46,246 crores.

• The Centre’s total receipts from disinvestment are also estimated to be at an all-

time high this fiscal.