Assessment of Current Methods of Disinvestment in India
Journal Title: International Journal of Business and Management Invention - Year 2018, Vol 7, Issue 3
Abstract
Disinvestment in CPSEs (Central Public Sector Enterprises) is an important plank of Government Policy to raise resources for development, rein in budgetary deficit, facilitate listing of PSUs, foster greater public accountability and unlock the true value of these enterprises. The key challenges to the disinvestment process come from lackluster performance of many CPSEs, poor perception of PSU’s by investors, opposition from unions and failure to get proper valuations for stake sale. Given the increasing reliance on Disinvestment to meet budgetary targets, its execution has posed challenges and Government has been facing difficulties in selling these stakes at fair prices to a wider base of investors. In the past, many Disinvestment offers by Government have met with lukewarm response from institutional and retail investors and government institutions like LIC had to step in to bridge the gap. Having set ambitious targets for disinvestment, Government has come out with more modes of disinvestment than were initially attempted. To its credit, Government has succeeded for the first time in many years in exceeding its disinvestment targets in the fiscal 2017-18. An assessment of the disinvestment methods has been attempted to compare their effectiveness, relative merits and demerits and their ability to meet broad objectives like a fair return to Government, ensure wider distribution of CPSE shareholding and also ensure reasonable returns to investors in medium to long term. As the government mulls a step-up in its divestment program and expands its Disinvestment horizon by including Insurance companies, subsidiaries of Indian Railways and CPSEs engaged in Defense sector, it may be appropriate to assess the Disinvestment methods available at this juncture and compare their effectiveness and suitability.
Authors and Affiliations
Dr. (Mrs. ) Aruna Kaushik
Keywords
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