Disinvestment Policy 2014


The present disinvestment policy has been articulated in the recent President’s addresses to Joint Sessions of Parliament and the Finance Minister’s Budget Speeches on 2014.
The salient features of the Policy are:
(i) Citizens have every right to own part of the shares of Public Sector Undertakings
(ii) Public Sector Undertakings are the wealth of the Nation and this wealth should rest in the hands of the people
(iii) While pursuing disinvestment, Government has to retain majority shareholding, i.e. at least 51% and management control of the Public Sector Undertakings. Action plan for Disinvestment Approach for Disinvestment.
On 5th November 2009, Government approved the following action plan for disinvestment in profit making government companies:
(i) Already listed profitable CPSEs (not meeting mandatory shareholding of 10%) are to be made compliant by ‘Offer for Sale’ by Government or by the CPSEs through issue of fresh shares or a combination of both
(ii) Unlisted CPSEs with no accumulated losses and having earned net profit in three preceding consecutive years are to be listed
(iii) Follow-on public offers would be considered taking into consideration the needs for capital investment of CPSE, on a case by case basis, and Government could simultaneously or independently offer a portion of its equity shareholding
(iv) In all cases of disinvestment, the Government would retain at least 51% equity and the management control (v) All cases of disinvestment are to be decided on a case by case basis.
(vi) The Department of Disinvestment is to identify CPSEs in consultation with respective administrative Ministries and submit proposal to Government in cases requiring Offer for Sale of Government equity

The Objectives of Disinvestment:
The following are the main objectives of the disinvestment policy of the Government.
(i) To reduce the financial burden on the Government.
(ii) To improve public finances.
(iii) To encourage wider share of ownership.
(iv) To introduce, competition and market discipline.
(v) To depoliticise essential services.
(vi) To help public enterprises upgrade their technology to become competitive.
(vii) To rationalise and retrain their workforce.
(viii) To build competence and strengthen their R & D.
(ix) To initiate diversification and expansion programmes.
Thus, the disinvestment is aimed to reduce or mitigate fiscal deficit, bring about a measure of economic stabilisation or to improve efficiency in public enterprises through structural adjustments initiated to improve their efficiency and productivity.
The new Industrial Policy provides that, “In order to raise resources and encourage wide public participation, a part of the government share holding in the public sector would be offered to mutual funds, financial institutions, general public and employees”. This is a process for disinvestment in the public enterprises.

Friday, 04th Dec 2015, 03:08:57 AM

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