Overview
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Context
The Union Cabinet has approved a proposal to empower the board of public sector undertakings (PSUs) to recommend strategic divestment, minority stake sale, or closure of their subsidiaries and joint ventures.
Background
Analysis
Key Highlights
What is disinvestment?
Disinvestment vs. Strategic Disinvestment
National Investment Fund The National Investment Fund (NIF) was constituted to channelize the proceeds from disinvestment of Central Public Sector Enterprises. NIF was to be maintained outside the Consolidated Fund of India. At present, the funds under NIF exist as a ‘Public Account’ which is outside the Consolidated Fund of India. The funds under NIF are permanent in nature. NIF would be utilized for the following purposes:
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Importance of Disinvestment
The importance of disinvestment by the government lies in utilisation of funds for:
Criticism of Disinvestment
Conclusion
Disinvestment assumes significance due to prevalence of an increasingly competitive environment, which makes it difficult for many PSUs to operate profitably.But government should also concentrate on increasing its own-revenue receipts to meet the public finances.It should also take into account the suggestions of the 14th FC in this regard. For example, selling stake in those companies with less than 1% market share.
Q1. What is the difference between disinvestment and strategic disinvestment? Critically examine the policy of disinvestment in India.
Q2 Discuss the objectives of disinvestment in India. Do you think the state should privatise even the profit-making public sector enterprises? Give reasons in support of your answer.
Verifying, please be patient.