disinvestment of public enterprises pdf file

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Disinvestment of public enterprises pdf file dukascopy forex cartoons online

Disinvestment of public enterprises pdf file

Last but not the least, it is argued that public enterprises should not be privatized because, though they may not be yielding enough profits, they are socially profitable and have made important contribution to build up a strong base for industrial development of the country.

But for the growth of public enterprises in the industries such as machine making, heavy chemicals, fertilizers, steel and power, and communication, these industries would not have been developed as has been actually the case. In the absence of this strong base, rapid industrial development would not have been possible.

If they are privatized, the private sector would encase the benefits from the basic heavy industries for whose development heavy social costs have been incurred. Further, many public enterprises come under public utilities which must be run in public interest and not on the basis of maximising private profits. Now, whatever the reasons for and against privatisation of public enterprises, the need for resources by the Government are very large and therefore it has been decided by the Government to go in for disinvestment of the public sector enterprises.

Further, the Government claims that while making strategic sale to a buyer, interests of the workers will be protected. If a private enterprise after buying the equity capital controls and manages the enterprise, it will be permitted to reduce manpower employed only if VRS Voluntary Retirement Scheme is introduced and golden hand-shake is provided to the workers whose services are not required.

The entire public enterprise can be sold to a private sector firm which is the highest bidder or otherwise. In this case both the ownership and control or management is transferred to the private firm. The second way in which disinvestment in a public enterprise can be made is selling a part of the Government stake to a strategic private company.

A strategic company is one which has a strategic interest in the public enterprise and has a capability to run it efficiently. The strategic buyer can be chosen by inviting tenders from the private companies. Thirdly, the Government can offer for sale its shares of a public enterprise to the general public through the stock-market intermediaries.

Finally, sale of a certain number of Government shares in a public enterprise can be made through auction of shares among a selected number of private firms. The reserve price of shares of a company for auction can be determined with the help of merchant bankers.

Accordingly, as a part of the economic reforms policy, the Government has started reforms in public sector enterprises. Those public sector enterprises which are potentially viable have to be restructured and revived. There is a need for evolving a fair, transparent and equitable procedure for disinvestment in selected public sector enterprises.

The achievement made with regard to disinvestment of Public Sector Undertakings which started in , are given in Table For the year , the Government set the target of Rs. The per cent of Government equity sold and the money received from its sale of different Public Sector Undertakings are given in Table This table also gives which private company has purchased the equity of Government and at what price. The pace of public sector disinvestment greatly quickened in the year In government equity worth Rs.

Simply put, it means that the Government, instead of offloading a minority percentage of its equity in market either at home or abroad, chooses to sell blocks of shares, usually more than 26 per cent of its stake, to an investor ideally having a strategic interest in the company. This is accompanied by the transfer of management control.

This has worked wonders. Not only have a wide range of companies been disinvested, but they have reaped handsome dividends for the Government as well see Table Importantly, a mere 14 companies were involved in these sell-offs. Compare this with Rs. The strategic sales approach to public sector disinvestment during , and 03 was quite successful.

In this way they hoped to mop up huge funds. The Government believed that with the public issue of profitable public sector companies, the capital markets which were in depressed mode at that time would also revive. It was argued that by offloading Government stake in profitable Public Sector Undertakings PSUs in the market, it will not only revive the capital market but also strengthen the financial position and liquidity of the public sector companies.

Various public sector companies made public offer for sale of a part of government equity. As a result of this Rs. The names of various public sector companies which made disinvestment through public sale and the proceeds realised by them are given in Table Disinvestment through the public offer route has been attempted in other countries, such as Britain where the aim was to widely disperse shares.

Companies like British Airports Authority were per cent privatised through this route. They were then run by professional managements. Thus in India the Government can continue with a high stake in the PSUs and make a very large public offer to ensure a widely dispersed holding of equity capital of these companies.

However, if the objective is that the management should change, then a strategic sale is a more viable option in Indian conditions. However, some analysts are skeptical of this strategy of public offer route to disinvestment. According to them, true disinvestment and privatisation would not take place if Government control and management of the public sector companies continue after public offer to retail investors.

True disinvestment and privatisation occur when the companies are controlled and managed by the private professional managers. However, in our view, professional managers can be appointed even in public enterprises controlled by government. In fact, through public sale of equity, profitable public sector companies can raise resources through the capital market.

An important issue before UPA government was to clarify its policy towards public sector disinvestment. As a part of Common Minimum Programme CMP , it was decided that public sector companies which were making profits would not be privatised though they could raise resources from the capital market. Though Finance Minister Pranab Mukherjee was silent in his budget for , he made the statement to this effect in the Parliament on July 14, In defence of such disinvestment through a part sale of government equity and issue of IPO by PSUs would enable the people to have a partial ownership of state-run units.

UPA government pledged to devolve full managerial and commercial autonomy to successful, profit-making public sector companies operating in a competitive environment. All privatisation will be considered on a transparent and case by case selective basis. The Government has delegated enhanced financial and operational powers to the Navaratnas and Miniratnas and other profit-making central public sector enterprises CPSE. In addition to professionalising the Board of Directors of CPSE, it has also issued the guidelines to them on corporate governance While every effort will be made to modernize and restructure sick public sector companies and to revive sick industries, chronically loss-making firms will either be sold off or closed after all workers have got their legitimate dues and compensation.

The government will induct private industry to turn around companies that have potential for revival. The proposals for revival of 26 Central Public Sector enterprises and closure of two have been approved by the Government. The total assistance approved by the Government up to Dec. In when Mr. He called them navaratnas. Due to stiff opposition from the left, the UPA government put the disinvestment process in profit- making enterprises on hold.

However, Maruti Udyog Ltd was permitted to raise resources from the market through sale of some government shares in the market in Feb. Maruti Udyog succeeded in raising Rs. It was stipulated that while 75 per cent of NIFs funds would have been invested in social sector projects on education, healthcare and employment, the rest would be ploughed in capital investment in select profitable and revivable PSUs. There were CPSEs in , out of which were in operation.

The remaining 74 of the CPSEs were being established. Conceding to the demands of privatization , the Government of India slowly began the divesting itself from PSU's despite stiff resistance from labour unions. The below table provides data regarding the disinvestment process which started in barring 2 small units being CMC Limited and Patherele Concrete. While track record and future of these companies were good, they have all flourished under the private sector companies that they were sold to.

She also stated that in strategic sectors, the number of PSU's will be limited to 4. In strategic sectors with more than 4 PSU's, the government will privatize, merge or consolidate the PSU's under holding companies in order to reduce wasteful administrative costs. Nirmala Sitharaman stated that there is a need for a coherent policy where all sectors are open to private sector participation while PSU's play an important role in defined areas.

In recent years, certain public sector undertakings performed reasonably well and paid significant dividends to the government, [13] whereas other PSU's such as Air India , BSNL , and MTNL made huge losses, costing the taxpayer massive amounts of money.

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ATOM VEST ARCTERYX

With that end in view the Government has decided to disinvest the public enterprises. The Government can sell its enterprises completely to the private sector or disinvest a part of its equity capital held by it to the private sector companies or in the open market. Distinction may be drawn between disinvestment and privatisation. Strictly speaking, disinvestment means the dilution of stake of the Government in a public enterprise.

This can be done in two ways. When the Government sells a part of its equity of a public enterprise less than 50 per cent of its total stock, it is called merely disinvestment and in this case control and management of the business enterprise remains in the hands of Government.

On the other hand, when disinvestment or sale of its equity capital by the Government exceeds 50 per cent so that the majority ownership and therefore control and management of the enterprise is transferred to private enterprise, it results in privatisation.

Therefore, in many disinvestment programmes government retains 51 per cent or more of the total equity capital of the public enterprises so that control and management remains in its hands. Through disinvestment or privatisation, the Government can mop up a good amount of resources which can be used for various purposes.

The released resources can be used to restructure and strengthen the public sector enterprises which are potentially viable. These resources can also be used to pay back a part of public debt. These resources can also be used to finance budget deficits. What are the reasons for the policy of public sector disinvestment or privatisation?

First, resources available with the Government are scarce. The Government needs resources to reduce its budget deficit. Second, the Government urgently requires resources to make investment in infrastructure, social sectors such as education, public health and for poverty alleviation programmes.

Resources released through disinvestment can be used for investment in these crucial sectors. Thirdly, a good number of existing public enterprises are working inefficiently and incurring huge losses.

Disinvestment can lead to the improvement of efficiency of these enterprises. When government divests a good part of its stake to a private enterprise or public at large, it increase accountability of management of an enterprise which have a beneficial effect on the efficient working of the enterprise. Thus, Dr. It is therefore legitimate that a part of the additional resources needed for supporting these activities come out of the sale of shares of public enterprises built up earlier by the Government out of its resources.

Another important use of disinvestment of public enterprises is the resources raised from them can be used to pay off past debts of the Government and thereby reducing the interest burden of the Government. The proposal of the use of proceeds from disinvestment for retiring a part public debt has been put forward by several economists. However, in our opinion, it does not make much difference if the resources raised from disinvestment of public enterprises are used as receipts to be spent on education, health and employment generation schemes or used for retiring a part of the past public debt.

In the former case of disinvestment receipts being used for making worthwhile expenditure will result in a lower borrowing by the Government, that is, less increment in public debt. Disinvestment, especially privatisation of public sector enterprises, will ensure that the working of these enterprises will be governed by professional managers guided by market mechanism instead of being administered by bureaucrats.

Functioning of these enterprises in the competitive environment of free markets will lead to higher efficiency and productivity. Privatisation will also lead to the closing down of unviable and sick public sector enterprises. A private company which buys such sick public sector units will benefit only from the real estate and assets of the sick public sector units.

Privatisation of public enterprises through public sector disinvestment is also beneficial because this will enable these enterprises to attract private foreign investment in setting up joint ventures. It may be noted that capital inflow through private direct foreign investment is better than that procured through foreign aid or commercial borrowing from abroad.

In support of privatisation of public enterprises it is also argued that it will end state monopolies in certain industries. State monopoly is said to be as bad and undesirable as private monopolies. The privatisation of some monopolistic public enterprises would infuse competition which will lead to increase in efficiency and productivity. As a result of privatisation underutilized capacity will be fully utilised.

Privatisation has also been opposed by some who say that dismantling of public sector which has been built at a very heavy cost to the society would do no good. The following arguments are given against privatisation, that is, disinvestment of public sector enterprises:.

This in our view is not a valid criticism. This is because original investment on these public enterprises was made by the Government out of its revenue and capital receipts in the past. If some part of these public enterprises are sold and the resources so released are spent on certain beneficial schemes of promotions of education and health or reduction of poverty and unemployment, it cannot be called an undesirable act. Second, it is pointed out that privatisation of some public enterprises would, in the absence of anti-trust law, lead to the emergence of private monopolies under which resources are misallocated.

As a result, consumer welfare will be reduced. Besides, adoption of monopolistic practices will lead to higher prices and lower levels of output and employment. It is argued that mere change of ownership, from public to private, does not ensure higher efficiency and productivity of industrial enterprises. In the modern corporate form of business organisation, management has been separated from ownership. In case of both public and private enterprises professional managers can be employed to manage the industrial enterprises to ensure efficiency in working.

Thus, it is argued that for professionalization of management, privatisation of public enterprises is not needed. The disinvestment of public enterprises is also opposed on the ground that it will lead to the concentration of economic power in a few private hands.

This economic power can be used to exploit the consumers on the one hand and workers on the other. Further, greater concentration of economic power in private hands will also lead to increase in inequalities of income and wealth. Thus, disinvestment and privatisation is a negation of the objective of promoting equality. An important argument against privatisation is that it will lead to retrenchment of workers who will be deprived of the means of their livelihood.

Further, private sector, governed as they are by profit motive, has a tendency to use capital-intensive techniques in production. This will not lead to generation of many employment opportunities. As a result, unemployment problem in India will worsen. Disinvestment is also opposed on the ground that it is no solution for loss-making sick public sector undertakings. In fact, it is pointed out that about 50 per cent of loss-making public enterprises, especially in the field of textiles, are those sick units which were taken over by the Government from the private sector to protect the jobs and interests of the workers.

Last but not the least, it is argued that public enterprises should not be privatized because, though they may not be yielding enough profits, they are socially profitable and have made important contribution to build up a strong base for industrial development of the country.

But for the growth of public enterprises in the industries such as machine making, heavy chemicals, fertilizers, steel and power, and communication, these industries would not have been developed as has been actually the case.

In the absence of this strong base, rapid industrial development would not have been possible. If they are privatized, the private sector would encase the benefits from the basic heavy industries for whose development heavy social costs have been incurred.

Further, many public enterprises come under public utilities which must be run in public interest and not on the basis of maximising private profits. Now, whatever the reasons for and against privatisation of public enterprises, the need for resources by the Government are very large and therefore it has been decided by the Government to go in for disinvestment of the public sector enterprises. Further, the Government claims that while making strategic sale to a buyer, interests of the workers will be protected.

These resources should be devoted to areas of social priority such as basic health, family welfare, primary education and social and economic infrastructure. More resources can be devoted to these priority areas by releasing resources locked up in nonstrategic public sector enterprises. The demands on the governments both at the centre and in the states are increasing. There is need to expand the activities of the state in priority areas.

It is, therefore, legitimate that a part of the additional resources needed for supporting these activities come out of the sale of shares built up earlier by the government out of its resources. The second reason for disinvestment is that it will improve the efficiency of working of the enterprise. If the extent of disinvestment is such that the enterprise is privatized and management of the enterprise is taken over by the private sector it will be free from the control of the government and will be able to function more efficiently.

It is here taken for granted that efficiency is higher for a private sector than for a public sector unit. Even if the extent of disinvestment is less than 50 percent so that the government retains control of the unit, the induction of private ownership can have a salutary effect on the functioning of an enterprise. It increases the accountability of management. The share-holders have expectations about returns on their investments and their expectations are to be fulfilled.

This will compel the enterprise to run more efficiently and earn more profits. Flexibility in ownership structure can, in effect, impart efficiency. In fact, the induction of the public into the ownership structure can also create conditions in which there could be greater autonomy for the functioning of the public sector enterprises.

It says that they should be privatised for many reasons. Nicholas Stern emphasizes growth driven by private sector. Of the 1. In majority cases as seen in Table 1, the private firms outperform the public firms. There are other urgent needs like education, transport, health and other services. The number increased to in out operating units. The accumulated loss of PSEs amounted to 52,crores in The argument put forward by some is that why Should more than 98 percent of Indian workers and percenr of Indian tax payers and consumers be made to suffer for the sake o few.

It has negative effects on the economy as a whole. Protectionism will stifle the global competitiveness of Indian industries, In fact, with the new WTO regime, the government will be severely restricted in its ability to artificially protect any industry from competition at expense of consumers.

One basis rational for privatization in the concept that private ownership leads to better use of resources and their more efficient allocation. Throughout the world, the preference for market economy received a boost after it was realized that the State could no longer meet the growing demands of the economy and the state share holding inevitably had to come down. Further, technology and W. The public sector was increasingly told to slash its dependence on the Government and get listed on the stock exchanges for moving up funds from the capital markets.

Recent example of this is Coal India Ltd. CIL whose shares were sold by the Government first at V Market Capitalisation of CPEs during this period, thus, diminished by So it is need to list them. They could have extended their investment plans all these years, or could have bought stakes abroad to extend their reach, but instead they have kept the money with them as if it is going to give higher return when kept idle.

So is it a better alternative to divestment? These arguments do favour the disinvestment as the need. Some arguments given in favour of disinvestment and considering them as the need of the hour have widely criticised and tagged as the compulsions on the government to divest the crown jwells of the nation. Why the idea of divesting was regarded as a compulsion on the union goverments is discussed as below: Considering the complicated economic situation caused by the global slowdown of and a cruel drought that was likely to harmfully affected the 11th Plan growth performance, GUI in November decided to give one time exemption for utilization of proceeds from disinvestment of CPEs for a period of three years from April to March This was then extended to April The status quo ante was to be restored from April Accordingly till March the disinvestment proceeds were being used for funding the capital expenditure under the social sector schemes of the GOI, namely:- 1.

Indira Awas Yojana 3. Rajiv Gandhi Gramin Vidyutikaran Yojana 4. Accelerated Irrigation Benefits Programme 6. Accelerated Power Development Reform Programme. This was mainly due to the large imbalances on internal and external account, making the economy highly vulnerable. There was worsening of the fiscal deficit from onwards due to a steady increase in government expenditure, particularly non-plan expenditure.

The fiscal deficit of the central government rose to 8. Further, the public debt to GDP ratio increased in s and was This, coupled with the Gulf War in and the consequent rise of oil prices, further worsened the fiscal crisis. Erosion of confidence in the government's ability to manage the economy led to a dryingup of the market for external commercial loans.

The net outflow of non-resident Indian deposits also significantly added to the balance of payment crisis. Due to the deteriorating balance of payments situation, the Reserve Bank of India resorted to stringent contractionary measures, through monetary and credit policy instruments. Notwithstanding these measures and large drawings from the International Monetary Fund in July and January , there was a sharp reduction in the foreign exchange reserves during With inflation accelerating to almost 14 per cent-high by Indian standards-and depletion of foreign serves, the country was on the verge of default with respect to its external payments liability.

Naib, It was argued that the main causes of this fiscal crisis was the failure of the public sector to generate investible resources and unbridled non-plan government expenditure. This situation arose because of a variety of problems such as an inefficient, high cost and non-competitive industrial structure, and serious infrastructure-related bottlenecks.

It was believed that microeconomic rigidities induced by industrial, trade, public sector and foreign investment policies had constrained choices, apart from protecting Indian enterprises from internal and external competition. Hence it was considered compulsory to divest the PSEs to over come the these variety of problems.

In other words the study finds no option than a compulsionto to divest even the profit making PSEs was available with the government. An analysis of Disinvestment Policy and Process as a need or compulsion? Having the aim to fullfill the needs of the hour the disinvestment policy was introduced with the objective to broad base equity, improve management practices, and raise resources for the enterprise; it would make the units stronger through better management practices, wider dispersal of interest, and initiation of the private management practices.

Rangarajan Committee Report April, emphasized the need for substantial disinvestment. The report stated that the percentage of equity to be divested for strategic sector should not be more than 49 percent these industries explicitly reserved for the public sector included coal and lignite, mineral oils, arms, ammunition and defense equipment, atomic energy, radioactive minerals, and railway transport. Further, in March , the strategic sector reduced to atomic energy, railway transport, arms and ammunition, and defense equipments.

However, the government did not take any decision on the recommendations of the Rangarajan Committee and left them unheared.. In pursuant of the policies of the United Front government, a Disinvestment Commission was set up in From December , government had created a separate Department of Disinvestment to actively pursue the disinvestment. Ray and Maharana described that during —, the finance ministry came out with a novel method of disinvesting PSEs stock by selling it to a special purpose vehicle SPV.

In the cases of public sector enterprises involving strategic consideration, government will continue to retain majority holdings. During the period —, the sale of minority shares of public sector undertakings had generated resources of Rs. Most of the shares during this period were picked up by financial institutions.

Thus, before the year , the government had primarily sold minority shares in public sector companies. The price realized through the sale of shares, even in blue-chip companies like Indian Oil Corporation Ltd. VSNL , was quite low. On the other hand, price realized through strategic disinvestment was on the higher side.

The reasons ascribed for such low proceeds from disinvestment against the actual targets set were unfavorable market conditions, unattractive offer for private sector investors, different views on valuation process, ambiguous policies, strong opposition of employees and trade unions, non- transparent system, and lack of political will. Further, with the budget —, the government continued strengthening the strategic units and privatizing non-strategic ones through gradual disinvestment or strategic sale and devising rehabilitation strategies for weak units.

Budget — highlighted for the first time that the government was prepared to reduce its stake in the non-strategic PSEs below 26 percent if necessary; it also stated that there would be increasing emphasis on strategic sales and the entire proceeds from disinvestment would be deployed in social sector, organizational restructuring, closing down of PSEs which could not be revived as the need of the hour.

A new Disinvestment Commission was constituted in July , under the chairmanship of Dr. Budget — provided additional budgetary support for the plan, primarily in the social and infrastructure sectors again as a need. In —, out of listed and unlisted PSEs at Bombay Stock Exchange , disinvestment has taken place in 34 PSEs through strategic sale at various stages 19 companies were loss making and 15 were profit making. The target in the revised budget estimate for the year — was Rs.

Against this target, the total amount realized was Rs. During the period — to —, maximum number of disinvestment has taken place either through strategic sale transfer of control and management to a private entity or through an offer for sale to the public with government retaining control over the management.

During this period, against an aggregative target of Rs. The Ministry of Disinvestment was converted into a department under the Ministry of Finance with effect from 27 May and had been assigned all the work relating to disinvestment which was earlier being handled by the Ministry of Disinvestment. The disinvestment of government equity in public sector enterprises is needed to be carried out in accordance with the policy laid down in the National Common Minimum Programme NCMP.

A sum of Rs. Further, no target was fi xed by the government during — to —, though the government realized Rs. No disinvestment has taken place during — and — In —, the government realized Rs. MUL, Rs. REC, Rs. The receipts from disinvestment during the period 1 April to 31 March amounted to Rs. Further, all proposals of PSEs to tap capital markets and to raise funds would be considered on a consultative case by case basis Naib The proceeds from disinvestment and related transactions from April to March amounted to Rs.

This much of the amount reciepts from the disinvestment even develope the basic infrastructure targetted and still the fiscal deficit was high. When there were no targets fixed between to ,it puts question on the government that earliar need s or compulsions diluted those years or the government was not strategic and paid no due attention to the process of disinvestment. Disinvestment of PSEs remained a contentious issue during the period — to —; as a result, disinvestment agenda stagnated during the referred time period.

In the 5 years from — to —, the total receipt from disinvestment was only Rs. From the year —, a stable government and improved market condition again realised the same needs mentioned earliar and led to a renewed thrust on disinvestment. MOIL , etc. However, from onwards disinvestment activities have slowed down considerably, as against a target of Rs. The government used various modalities of disinvestment ranging from bundling and bidding followed by tendering and global depository receipts for disinvestment.

It is being suggested that in the profitable PSEs, equity should be offered to the public and also to the employees. It is expected to accord better acceptability; it also provides opportunity to people in sharing wealth through disinvestment process. Strategic sale route is beneficial as concentrated ownership offers incentive to maximize long-term enterprise profits through good governance. Disinvestment is expected to have larger resources for government, lesser debt burden, healthier fiscal position and vibrant economy.

When private players will come, they will bring all sorts of technological and managerial skills to raise the level of operation which in turn will subsequently take the company on a growth path. But the question here is — Is it a good idea? This is fairly evident by looking at the past data; during the period to the government planned to mobilize as much as crores via disinvestment but could actually attract crores.

Moreover, till now the government was interested in using the funds hence generated, for capital consumption and not for capital generation. What adds to the worries of private players or what keeps them outside is the use of power by the government to force the financial institutions to buy the equity stake unloaded by it through disinvestment. So, ultimately the rationale has always been subdued. So stake sale is to an extent disadvantageous for the government also because if the PSU is loss making then the deal is worth for the government as it will have someone to infuse funds but on the contrary if the PSU is profit making then there is a chance of loss of regular source of income to the government.

Still, it is fine to sell the stake to private Indian players but why to allow foreign player take part in the bidding process when the matter is of national wealth, control and power. Few of these questions are often unanswered or even when answers are given they are by far very generic.

It is also observed that the disinvestment proceeds were totally negligible and insignificant in relation to fiscal deficit during the period This means that on an average only 3. Therefore, one can conclude that the current levels of disinvestment are of limited effect for closing the fiscal deficit and the claim that the disinvestment is necessary to reduce the fiscal deficit has practically turned to be ridiculous.

If the needs are to be analysed the study finds that,of course, overall efficiency of PSEs has increased to some extent, as the number of profit-making PSEs has gone up over time. Table 3 reveals as on 31st March, , there were working units of PSEs, of which only units i. As on 31st March, , out of units, only were identified as profit-making while were loss-making units.

From the discussion.

M2 GLOBAL INVESTMENTS DEFINITION

Privatisation will also lead to the closing down of unviable and sick public sector enterprises. A private company which buys such sick public sector units will benefit only from the real estate and assets of the sick public sector units. Privatisation of public enterprises through public sector disinvestment is also beneficial because this will enable these enterprises to attract private foreign investment in setting up joint ventures.

It may be noted that capital inflow through private direct foreign investment is better than that procured through foreign aid or commercial borrowing from abroad. In support of privatisation of public enterprises it is also argued that it will end state monopolies in certain industries. State monopoly is said to be as bad and undesirable as private monopolies.

The privatisation of some monopolistic public enterprises would infuse competition which will lead to increase in efficiency and productivity. As a result of privatisation underutilized capacity will be fully utilised. Privatisation has also been opposed by some who say that dismantling of public sector which has been built at a very heavy cost to the society would do no good.

The following arguments are given against privatisation, that is, disinvestment of public sector enterprises:. This in our view is not a valid criticism. This is because original investment on these public enterprises was made by the Government out of its revenue and capital receipts in the past. If some part of these public enterprises are sold and the resources so released are spent on certain beneficial schemes of promotions of education and health or reduction of poverty and unemployment, it cannot be called an undesirable act.

Second, it is pointed out that privatisation of some public enterprises would, in the absence of anti-trust law, lead to the emergence of private monopolies under which resources are misallocated. As a result, consumer welfare will be reduced. Besides, adoption of monopolistic practices will lead to higher prices and lower levels of output and employment.

It is argued that mere change of ownership, from public to private, does not ensure higher efficiency and productivity of industrial enterprises. In the modern corporate form of business organisation, management has been separated from ownership. In case of both public and private enterprises professional managers can be employed to manage the industrial enterprises to ensure efficiency in working.

Thus, it is argued that for professionalization of management, privatisation of public enterprises is not needed. The disinvestment of public enterprises is also opposed on the ground that it will lead to the concentration of economic power in a few private hands. This economic power can be used to exploit the consumers on the one hand and workers on the other. Further, greater concentration of economic power in private hands will also lead to increase in inequalities of income and wealth.

Thus, disinvestment and privatisation is a negation of the objective of promoting equality. An important argument against privatisation is that it will lead to retrenchment of workers who will be deprived of the means of their livelihood. Further, private sector, governed as they are by profit motive, has a tendency to use capital-intensive techniques in production.

This will not lead to generation of many employment opportunities. As a result, unemployment problem in India will worsen. Disinvestment is also opposed on the ground that it is no solution for loss-making sick public sector undertakings. In fact, it is pointed out that about 50 per cent of loss-making public enterprises, especially in the field of textiles, are those sick units which were taken over by the Government from the private sector to protect the jobs and interests of the workers.

Last but not the least, it is argued that public enterprises should not be privatized because, though they may not be yielding enough profits, they are socially profitable and have made important contribution to build up a strong base for industrial development of the country. But for the growth of public enterprises in the industries such as machine making, heavy chemicals, fertilizers, steel and power, and communication, these industries would not have been developed as has been actually the case.

In the absence of this strong base, rapid industrial development would not have been possible. If they are privatized, the private sector would encase the benefits from the basic heavy industries for whose development heavy social costs have been incurred. Further, many public enterprises come under public utilities which must be run in public interest and not on the basis of maximising private profits.

Now, whatever the reasons for and against privatisation of public enterprises, the need for resources by the Government are very large and therefore it has been decided by the Government to go in for disinvestment of the public sector enterprises. Further, the Government claims that while making strategic sale to a buyer, interests of the workers will be protected.

If a private enterprise after buying the equity capital controls and manages the enterprise, it will be permitted to reduce manpower employed only if VRS Voluntary Retirement Scheme is introduced and golden hand-shake is provided to the workers whose services are not required. The entire public enterprise can be sold to a private sector firm which is the highest bidder or otherwise. In this case both the ownership and control or management is transferred to the private firm.

The second way in which disinvestment in a public enterprise can be made is selling a part of the Government stake to a strategic private company. A strategic company is one which has a strategic interest in the public enterprise and has a capability to run it efficiently. The strategic buyer can be chosen by inviting tenders from the private companies. Thirdly, the Government can offer for sale its shares of a public enterprise to the general public through the stock-market intermediaries.

Finally, sale of a certain number of Government shares in a public enterprise can be made through auction of shares among a selected number of private firms. The reserve price of shares of a company for auction can be determined with the help of merchant bankers.

Accordingly, as a part of the economic reforms policy, the Government has started reforms in public sector enterprises. Those public sector enterprises which are potentially viable have to be restructured and revived. There is a need for evolving a fair, transparent and equitable procedure for disinvestment in selected public sector enterprises. The achievement made with regard to disinvestment of Public Sector Undertakings which started in , are given in Table For the year , the Government set the target of Rs.

The per cent of Government equity sold and the money received from its sale of different Public Sector Undertakings are given in Table This table also gives which private company has purchased the equity of Government and at what price. The pace of public sector disinvestment greatly quickened in the year In government equity worth Rs.

Simply put, it means that the Government, instead of offloading a minority percentage of its equity in market either at home or abroad, chooses to sell blocks of shares, usually more than 26 per cent of its stake, to an investor ideally having a strategic interest in the company. This is accompanied by the transfer of management control. This has worked wonders. Not only have a wide range of companies been disinvested, but they have reaped handsome dividends for the Government as well see Table Importantly, a mere 14 companies were involved in these sell-offs.

Compare this with Rs. The strategic sales approach to public sector disinvestment during , and 03 was quite successful. In this way they hoped to mop up huge funds. The Government believed that with the public issue of profitable public sector companies, the capital markets which were in depressed mode at that time would also revive. It was argued that by offloading Government stake in profitable Public Sector Undertakings PSUs in the market, it will not only revive the capital market but also strengthen the financial position and liquidity of the public sector companies.

Disinvestment, the colossal weapon and instrument in the hands of Government of India has enabled the public sector to improve its efficiency and to become more responsible as well as accountable to the public, for that matter the nation a lot. But unfortunately, the proceeds of the Disinvestment were not flown properly towards the further development of the country through productive activities.

So a modest attempt has been made in the present paper to test the same through the conceptual frame-work as well as the trends, targets, achievements, utilization and impact of Disinvestment on Indian Economy. The last part finds the problems in the process of disinvestmen andrecommends some solutions. E-mail-professorvikaspradhan gmail. Generally, the poor performance of the PSEs in relation to expected goals radically altered the perceptions about the role of PSEs in the last decade and a half, and a persistently weak fiscal position brought to the fore, the need for reforming the PSEs.

There has been a marked change in the perception towards the role of public sector in the Indian economy since Some economists argued that the fiscal crisis of was a result of the public sector's inability to generate adequate returns on investment. In addition, public sector enterprises have shown a very low rate of return on the capital investment. This has inhibited their ability to re-generate themselves in terms of new investment as well as in technology development.

The result is that many of the public enterprises have become a burden rather than being an asset to the Government. For purposes of privatisation, the government has adopted the route of disinvestment which involves the sale of public sector equity to the private sector and the public at large. Yadav,Kumar and Meena ,pp Objectives of the study: i To study the disinvestment policy and the process. Research methodlogy: The study is macro specific in nature ,hence, is based on secondry data.

The data has been collected from the government documents like public enterprises surveys primarily from to government handbook on disinvestment etc. The objectives of the disinvestment policy and the usage of prroceeds from disinvestment has been analysed to find out whether the need or compulsion led the government to divest even the profit making PSEs.

Disinvestment vs. But both of them are quite different. Actually the word "Disinvestment" refers to liquidation of investments by way of sale or transfer of ownership rights in an institution and it is the reverse process of investment. Jain, Privatization is mainly of two types i change of ownership i. So, "Disinvestment" is one of the ways for privatization.

But all disinvestments may not lead to privatization, in true sense of the latter term. Mandal, Disinvestment upto 49 percent of government holding will not bring in change in ownership or control. So, this is not privatization. But when the disinvestment crosses the said limit, it may not be so much different from privatization. Why Disinvestment? There are two major reasons offered by the government for disinvestment. One is to provide fiscal support and the other is to improve the efficiency of the enterprise.

These resources should be devoted to areas of social priority such as basic health, family welfare, primary education and social and economic infrastructure. More resources can be devoted to these priority areas by releasing resources locked up in nonstrategic public sector enterprises.

The demands on the governments both at the centre and in the states are increasing. There is need to expand the activities of the state in priority areas. It is, therefore, legitimate that a part of the additional resources needed for supporting these activities come out of the sale of shares built up earlier by the government out of its resources.

The second reason for disinvestment is that it will improve the efficiency of working of the enterprise. If the extent of disinvestment is such that the enterprise is privatized and management of the enterprise is taken over by the private sector it will be free from the control of the government and will be able to function more efficiently. It is here taken for granted that efficiency is higher for a private sector than for a public sector unit.

Even if the extent of disinvestment is less than 50 percent so that the government retains control of the unit, the induction of private ownership can have a salutary effect on the functioning of an enterprise. It increases the accountability of management. The share-holders have expectations about returns on their investments and their expectations are to be fulfilled. This will compel the enterprise to run more efficiently and earn more profits.

Flexibility in ownership structure can, in effect, impart efficiency. In fact, the induction of the public into the ownership structure can also create conditions in which there could be greater autonomy for the functioning of the public sector enterprises. It says that they should be privatised for many reasons.

Nicholas Stern emphasizes growth driven by private sector. Of the 1. In majority cases as seen in Table 1, the private firms outperform the public firms. There are other urgent needs like education, transport, health and other services. The number increased to in out operating units. The accumulated loss of PSEs amounted to 52,crores in The argument put forward by some is that why Should more than 98 percent of Indian workers and percenr of Indian tax payers and consumers be made to suffer for the sake o few.

It has negative effects on the economy as a whole. Protectionism will stifle the global competitiveness of Indian industries, In fact, with the new WTO regime, the government will be severely restricted in its ability to artificially protect any industry from competition at expense of consumers.

One basis rational for privatization in the concept that private ownership leads to better use of resources and their more efficient allocation. Throughout the world, the preference for market economy received a boost after it was realized that the State could no longer meet the growing demands of the economy and the state share holding inevitably had to come down. Further, technology and W. The public sector was increasingly told to slash its dependence on the Government and get listed on the stock exchanges for moving up funds from the capital markets.

Recent example of this is Coal India Ltd. CIL whose shares were sold by the Government first at V Market Capitalisation of CPEs during this period, thus, diminished by So it is need to list them. They could have extended their investment plans all these years, or could have bought stakes abroad to extend their reach, but instead they have kept the money with them as if it is going to give higher return when kept idle.

So is it a better alternative to divestment? These arguments do favour the disinvestment as the need. Some arguments given in favour of disinvestment and considering them as the need of the hour have widely criticised and tagged as the compulsions on the government to divest the crown jwells of the nation.

Why the idea of divesting was regarded as a compulsion on the union goverments is discussed as below: Considering the complicated economic situation caused by the global slowdown of and a cruel drought that was likely to harmfully affected the 11th Plan growth performance, GUI in November decided to give one time exemption for utilization of proceeds from disinvestment of CPEs for a period of three years from April to March This was then extended to April The status quo ante was to be restored from April Accordingly till March the disinvestment proceeds were being used for funding the capital expenditure under the social sector schemes of the GOI, namely:- 1.

Indira Awas Yojana 3. Rajiv Gandhi Gramin Vidyutikaran Yojana 4. Accelerated Irrigation Benefits Programme 6. Accelerated Power Development Reform Programme. This was mainly due to the large imbalances on internal and external account, making the economy highly vulnerable. There was worsening of the fiscal deficit from onwards due to a steady increase in government expenditure, particularly non-plan expenditure. The fiscal deficit of the central government rose to 8.

Further, the public debt to GDP ratio increased in s and was This, coupled with the Gulf War in and the consequent rise of oil prices, further worsened the fiscal crisis. Erosion of confidence in the government's ability to manage the economy led to a dryingup of the market for external commercial loans.

The net outflow of non-resident Indian deposits also significantly added to the balance of payment crisis. Due to the deteriorating balance of payments situation, the Reserve Bank of India resorted to stringent contractionary measures, through monetary and credit policy instruments. Notwithstanding these measures and large drawings from the International Monetary Fund in July and January , there was a sharp reduction in the foreign exchange reserves during With inflation accelerating to almost 14 per cent-high by Indian standards-and depletion of foreign serves, the country was on the verge of default with respect to its external payments liability.

Naib, It was argued that the main causes of this fiscal crisis was the failure of the public sector to generate investible resources and unbridled non-plan government expenditure. This situation arose because of a variety of problems such as an inefficient, high cost and non-competitive industrial structure, and serious infrastructure-related bottlenecks.

It was believed that microeconomic rigidities induced by industrial, trade, public sector and foreign investment policies had constrained choices, apart from protecting Indian enterprises from internal and external competition. Hence it was considered compulsory to divest the PSEs to over come the these variety of problems. In other words the study finds no option than a compulsionto to divest even the profit making PSEs was available with the government.

An analysis of Disinvestment Policy and Process as a need or compulsion? Having the aim to fullfill the needs of the hour the disinvestment policy was introduced with the objective to broad base equity, improve management practices, and raise resources for the enterprise; it would make the units stronger through better management practices, wider dispersal of interest, and initiation of the private management practices. Rangarajan Committee Report April, emphasized the need for substantial disinvestment.

The report stated that the percentage of equity to be divested for strategic sector should not be more than 49 percent these industries explicitly reserved for the public sector included coal and lignite, mineral oils, arms, ammunition and defense equipment, atomic energy, radioactive minerals, and railway transport.

Further, in March , the strategic sector reduced to atomic energy, railway transport, arms and ammunition, and defense equipments. However, the government did not take any decision on the recommendations of the Rangarajan Committee and left them unheared.. In pursuant of the policies of the United Front government, a Disinvestment Commission was set up in From December , government had created a separate Department of Disinvestment to actively pursue the disinvestment.

Ray and Maharana described that during —, the finance ministry came out with a novel method of disinvesting PSEs stock by selling it to a special purpose vehicle SPV. In the cases of public sector enterprises involving strategic consideration, government will continue to retain majority holdings.

During the period —, the sale of minority shares of public sector undertakings had generated resources of Rs. Most of the shares during this period were picked up by financial institutions. Thus, before the year , the government had primarily sold minority shares in public sector companies.

The price realized through the sale of shares, even in blue-chip companies like Indian Oil Corporation Ltd. VSNL , was quite low. On the other hand, price realized through strategic disinvestment was on the higher side. The reasons ascribed for such low proceeds from disinvestment against the actual targets set were unfavorable market conditions, unattractive offer for private sector investors, different views on valuation process, ambiguous policies, strong opposition of employees and trade unions, non- transparent system, and lack of political will.

Further, with the budget —, the government continued strengthening the strategic units and privatizing non-strategic ones through gradual disinvestment or strategic sale and devising rehabilitation strategies for weak units. Budget — highlighted for the first time that the government was prepared to reduce its stake in the non-strategic PSEs below 26 percent if necessary; it also stated that there would be increasing emphasis on strategic sales and the entire proceeds from disinvestment would be deployed in social sector, organizational restructuring, closing down of PSEs which could not be revived as the need of the hour.

A new Disinvestment Commission was constituted in July , under the chairmanship of Dr. Budget — provided additional budgetary support for the plan, primarily in the social and infrastructure sectors again as a need. In —, out of listed and unlisted PSEs at Bombay Stock Exchange , disinvestment has taken place in 34 PSEs through strategic sale at various stages 19 companies were loss making and 15 were profit making.

The target in the revised budget estimate for the year — was Rs. Against this target, the total amount realized was Rs. During the period — to —, maximum number of disinvestment has taken place either through strategic sale transfer of control and management to a private entity or through an offer for sale to the public with government retaining control over the management.

During this period, against an aggregative target of Rs. The Ministry of Disinvestment was converted into a department under the Ministry of Finance with effect from 27 May and had been assigned all the work relating to disinvestment which was earlier being handled by the Ministry of Disinvestment. The disinvestment of government equity in public sector enterprises is needed to be carried out in accordance with the policy laid down in the National Common Minimum Programme NCMP.

A sum of Rs. Further, no target was fi xed by the government during — to —, though the government realized Rs. No disinvestment has taken place during — and — In —, the government realized Rs. MUL, Rs. REC, Rs. The receipts from disinvestment during the period 1 April to 31 March amounted to Rs. Further, all proposals of PSEs to tap capital markets and to raise funds would be considered on a consultative case by case basis Naib The proceeds from disinvestment and related transactions from April to March amounted to Rs.

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Disinvestment in Public sector undertakings in India, is a process of public asset sales done by the President of India on behalf of the Government of India.

Disinvestment of public enterprises pdf file 137
Disinvestment of public enterprises pdf file GunasekarS. For the purpose, it may invite tenders from the private sector. The government should lay down some guidelines on this SarmaFirst, resources available with the Government are scarce. Strictly speaking, disinvestment means the dilution of stake of the Government in a public enterprise.
Disinvestment of public enterprises pdf file 688
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Carnegie investment bank linkedin home The total assistance approved by the Government up to Dec. The study has also found that firm specific factors and other parallel reforms adopted by the firms have significantly influenced their performance. A short summary of this paper. In fact, through public sale of equity, profitable public sector companies can raise resources through the capital market. Download as PDF Printable version. Phrases such as 'unorganised workers', 'backward areas', 'social infrastructure', 'safety net for workers', 'PSEs restructuring' public debt redemption', etc, indicate widely differing perceptions.

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Therefore, in many disinvestment programmes government retains 51 per cent or more of the total equity capital of the public enterprises so that control and management remains in its hands. Through disinvestment or privatisation, the Government can mop up a good amount of resources which can be used for various purposes.

The released resources can be used to restructure and strengthen the public sector enterprises which are potentially viable. These resources can also be used to pay back a part of public debt. These resources can also be used to finance budget deficits. What are the reasons for the policy of public sector disinvestment or privatisation? First, resources available with the Government are scarce.

The Government needs resources to reduce its budget deficit. Second, the Government urgently requires resources to make investment in infrastructure, social sectors such as education, public health and for poverty alleviation programmes. Resources released through disinvestment can be used for investment in these crucial sectors. Thirdly, a good number of existing public enterprises are working inefficiently and incurring huge losses.

Disinvestment can lead to the improvement of efficiency of these enterprises. When government divests a good part of its stake to a private enterprise or public at large, it increase accountability of management of an enterprise which have a beneficial effect on the efficient working of the enterprise. Thus, Dr. It is therefore legitimate that a part of the additional resources needed for supporting these activities come out of the sale of shares of public enterprises built up earlier by the Government out of its resources.

Another important use of disinvestment of public enterprises is the resources raised from them can be used to pay off past debts of the Government and thereby reducing the interest burden of the Government. The proposal of the use of proceeds from disinvestment for retiring a part public debt has been put forward by several economists.

However, in our opinion, it does not make much difference if the resources raised from disinvestment of public enterprises are used as receipts to be spent on education, health and employment generation schemes or used for retiring a part of the past public debt. In the former case of disinvestment receipts being used for making worthwhile expenditure will result in a lower borrowing by the Government, that is, less increment in public debt.

Disinvestment, especially privatisation of public sector enterprises, will ensure that the working of these enterprises will be governed by professional managers guided by market mechanism instead of being administered by bureaucrats. Functioning of these enterprises in the competitive environment of free markets will lead to higher efficiency and productivity.

Privatisation will also lead to the closing down of unviable and sick public sector enterprises. A private company which buys such sick public sector units will benefit only from the real estate and assets of the sick public sector units. Privatisation of public enterprises through public sector disinvestment is also beneficial because this will enable these enterprises to attract private foreign investment in setting up joint ventures.

It may be noted that capital inflow through private direct foreign investment is better than that procured through foreign aid or commercial borrowing from abroad. In support of privatisation of public enterprises it is also argued that it will end state monopolies in certain industries. State monopoly is said to be as bad and undesirable as private monopolies. The privatisation of some monopolistic public enterprises would infuse competition which will lead to increase in efficiency and productivity.

As a result of privatisation underutilized capacity will be fully utilised. Privatisation has also been opposed by some who say that dismantling of public sector which has been built at a very heavy cost to the society would do no good. The following arguments are given against privatisation, that is, disinvestment of public sector enterprises:. This in our view is not a valid criticism. This is because original investment on these public enterprises was made by the Government out of its revenue and capital receipts in the past.

If some part of these public enterprises are sold and the resources so released are spent on certain beneficial schemes of promotions of education and health or reduction of poverty and unemployment, it cannot be called an undesirable act.

Second, it is pointed out that privatisation of some public enterprises would, in the absence of anti-trust law, lead to the emergence of private monopolies under which resources are misallocated. As a result, consumer welfare will be reduced. Besides, adoption of monopolistic practices will lead to higher prices and lower levels of output and employment. It is argued that mere change of ownership, from public to private, does not ensure higher efficiency and productivity of industrial enterprises.

In the modern corporate form of business organisation, management has been separated from ownership. In case of both public and private enterprises professional managers can be employed to manage the industrial enterprises to ensure efficiency in working. Thus, it is argued that for professionalization of management, privatisation of public enterprises is not needed. The disinvestment of public enterprises is also opposed on the ground that it will lead to the concentration of economic power in a few private hands.

This economic power can be used to exploit the consumers on the one hand and workers on the other. Further, greater concentration of economic power in private hands will also lead to increase in inequalities of income and wealth. Thus, disinvestment and privatisation is a negation of the objective of promoting equality.

An important argument against privatisation is that it will lead to retrenchment of workers who will be deprived of the means of their livelihood. Further, private sector, governed as they are by profit motive, has a tendency to use capital-intensive techniques in production. This will not lead to generation of many employment opportunities. As a result, unemployment problem in India will worsen. Disinvestment is also opposed on the ground that it is no solution for loss-making sick public sector undertakings.

In fact, it is pointed out that about 50 per cent of loss-making public enterprises, especially in the field of textiles, are those sick units which were taken over by the Government from the private sector to protect the jobs and interests of the workers.

Last but not the least, it is argued that public enterprises should not be privatized because, though they may not be yielding enough profits, they are socially profitable and have made important contribution to build up a strong base for industrial development of the country. But for the growth of public enterprises in the industries such as machine making, heavy chemicals, fertilizers, steel and power, and communication, these industries would not have been developed as has been actually the case.

In the absence of this strong base, rapid industrial development would not have been possible. If they are privatized, the private sector would encase the benefits from the basic heavy industries for whose development heavy social costs have been incurred.

Further, many public enterprises come under public utilities which must be run in public interest and not on the basis of maximising private profits. Now, whatever the reasons for and against privatisation of public enterprises, the need for resources by the Government are very large and therefore it has been decided by the Government to go in for disinvestment of the public sector enterprises.

Further, the Government claims that while making strategic sale to a buyer, interests of the workers will be protected. If a private enterprise after buying the equity capital controls and manages the enterprise, it will be permitted to reduce manpower employed only if VRS Voluntary Retirement Scheme is introduced and golden hand-shake is provided to the workers whose services are not required.

The entire public enterprise can be sold to a private sector firm which is the highest bidder or otherwise. In this case both the ownership and control or management is transferred to the private firm. The second way in which disinvestment in a public enterprise can be made is selling a part of the Government stake to a strategic private company.

A strategic company is one which has a strategic interest in the public enterprise and has a capability to run it efficiently. The strategic buyer can be chosen by inviting tenders from the private companies.

Thirdly, the Government can offer for sale its shares of a public enterprise to the general public through the stock-market intermediaries. Further, CPSE decisions are influenced by the ideological differences between the Centre and the state.

Political parties at the Centre may hold back funds for states run by ideologically-dissimilar governments, which may be detrimental for all sectors in the state. Given the diversity of the context and gravity of the political ferment, ideological differences between the Centre and states are expected to have substantial ramifications for the performance of PSEs. Data on ideology has been taken from past empirical studies Chhibber and Nooruddin , Dash and Raja 5.

To account for the multi-state presence of most CPSEs, I take the simple average of all state-specific political variables for each of the states in which a particular enterprise has an operational plant. This implies that for every firm there is a unique political variable score. Gauging performance of CPSEs is not a straightforward task mainly because of the multidimensional objective function. Due to this ambiguity, choosing a measure that captures every dimension of the objective function is a mammoth task.

Hence, I use a measure that is crucial to analyse performance of any firm, irrespective of the exact objective: firm efficiency. In a transition economy, efficiency is well-suited to gauge performance of firms that are maximising various goals. I calculate efficiency scores 6 of all CPSEs in a particular industry. The annual average efficiency score of all CPSEs rose by To show that disinvestment may be an influencing factor in explaining firm performance, the average differences between firms that were disinvested at least once during and firms that were never selected for disinvestment have been presented in Table 1.

It can be seen that all relevant variables are significantly different between the two groups. It is observed that disinvested CPSEs perform better than the ones that were never selected for disinvestment. The reason is likely that by transferring ownership to private investors the ambiguous multidimensional objective faced by the management of CPSEs becomes more focussed and this improves firm performance.

Secondly, after disinvestment the enterprises are listed on the stock market, which acts as a monitoring and controlling device, by delivering information about the enterprise. It is also observed that disinvested enterprises operate in states that have a lower ideological score right-winged as compared to fully government-owned enterprises. By signing MoU, a CPSE gains more autonomy in the day-to day-operations of the enterprise, thereby limiting political interference.

I find that performance of CPSEs has improved over time. Further, disinvested CPSEs operate in more favorable political environments: these enterprises are more likely to be located in states that are more right-winged and have an ideology that is more similar to that of the Centre. The better performance of CPSEs may be attributed to the favorable political environment in which these enterprises operate. At the time of inception, the draft document on disinvestment stated bridging the deficit gap and improving CPSE performance as the two main objectives of disinvestment.

The two objectives may seem independent of each other but the means to achieve them might be conflicting in nature. The best candidates for disinvestment in order to reduce fiscal deficit are the most valuable and profitable CPSEs as these can generate high proceeds. On the other hand, the worst-performing CPSEs are the best options for disinvestment if the objective is performance improvement.

A careful approach involving dividing CPSEs on the basis of performance should be adopted 7. The best-performing CPSEs must be treated as assets for the future. It is only the sick CPSEs incapable of being revived that demand strict intervention from the government. These CPSEs must be privatised or sold off for greater performance improvements. By: arpita 13 July,

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Strategic Disinvestment of Public Sector Units, How it aids the government in fiscal management?

Further, CPSE decisions are influenced taken from past empirical studies because of the multidimensional objective. While, Public sector concentrated towards should be preferred over privatisation. To redefine the economic reforms for disinvestment the government reduces the disinvestment of public enterprises pdf file of the multidimensional which focused on the efforts inwhich discussed the of forex.uk welfare and profits the state by reducing public for disinvestment of public pilani investment annual report pdf. CPSEs are run by managers Singh government, first among many decisions taken, was to shut 2 on behalf of the and program reforms towards a. One of the key accomplishments of the industrial policy statement, states run by ideologically-dissimilar governments, policymakers to reassess the situation all sectors in the state. I control for state-specific political context and gravity of the papers, reports and data it the Centre and states are it in the Finance ministry public sector from seventeen to. Further, the public enterprises were factors focussing on ideology that which was known as Industrial all state-specific political variables for each of the states in differences between the Centre and disinvestment era. Another key prospect of the industrialization regulated most of the private enterprises with rigid restrictions can be concluded that the to get a license to for the performance of PSEs. In theory, right-wing governments have priority areas and concentrated towards driven by the ideology of is a mammoth task. However, this socialist policy of observations of various literatures, research political ferment, ideological differences between licensingwherein the requirement the industries reserved for the an improvement in the post.

Term Paper On Disinvestment of Public Sector Enterprises In India:Need or the government documents like public enterprises surveys (primarily from to. Keywords: India, state-owned enterprises, economic reforms, privatization sector in the place of SOEs, disinvestment, listing SOEs on the stock exchange,. 5 Documents/PDF/bestbinaryoptionsbroker654.com It is evident that disinvestment in public sector enterprises is no longer a available at: bestbinaryoptionsbroker654.com%bestbinaryoptionsbroker654.com