Short Essay on Disinvestment – The main thrust of the investment policy is to: (1) close down of Public Sector Undertakings which cannot be revived, (2) restructure and revive potentially viable Public Sector Undertakings, (3) bring down government equity in all non-strategic Public Sector Undertakings up to 26% or less and (4) fully protect interest of workers.
The policy took off in 1992 when the government decided to withdraw 20% of government’s share in select public sector undertakings in favour of Public Sector Institutional Investors. The Rangarajan Committee on Disinvestment of Shares in Public Sector Undertakings (1993) recommended that the percentage of equity to be divested could be raised to 49% in industries especially for the public sector.
ADVERTISEMENTS:
In all the budgets of Government of India starting from 1998-1999 onwards, it has been emphasised that the government holding would be 26% in all non-strategic public sector undertakings and in those industries involving strategic considerations, the government would retain majority holding.
The Disinvestment Commission was established in 1996. Department of Disinvestment was set up in 1999. BALCO is a classic example of disinvestment.
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