What is disinvestment?


  • It means sale or liquidation of the public assets by the government. These are usually Central and state public sector enterprises, projects or other fixed assets.
  • The government can sell its shares, where it is the majority shareholder (Owns more than 51% of shares). For example, Air India, Bharat Petroleum, Delhi Metro Rail Corporation, etc.
  • The government can either reduce its share by selling a part of the company or can transfer its ownership to the highest bidder.

Main objectives of Disinvestment in India:

    • Reducing the fiscal burden on the exchequer
    • Improving public finances
    • To improve the overall efficiency of PSUs
    • Funding growth and development programmes
    • Maintaining and promoting competition in the market
  • Nodal Department: Department of Investment and Public Asset Management(DIPAM) under the Ministry of Finance, handles the disinvestment-related works for the government.

Are Disinvestments targets met by the government?

  • Except in a few years, the government fails to reach the disinvestment target each year.
  • In the current year of 2020-21, less than 3% of the targeted revenue is generated through disinvestment as of November 2020.

Source: Indian Express


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