What is disinvestment?

Disinvestment

• It means sale or liquidation of the public assets by the government. These are usually Central and state public sector enterprises, projects or other fixed assets.
• The government can sell its shares, where it is the majority shareholder (Owns more than 51% of shares). For example, Air India, Bharat Petroleum, Delhi Metro Rail Corporation, etc.
• The government can either reduce its share by selling a part of the company or can transfer its ownership to the highest bidder.

Main objectives of Disinvestment in India:

• • Reducing the fiscal burden on the exchequer
  • Improving public finances
  • To improve the overall efficiency of PSUs
  • Funding growth and development programmes
  • Maintaining and promoting competition in the market
• Nodal Department: Department of Investment and Public Asset Management(DIPAM) under the Ministry of Finance, handles the disinvestment-related works for the government.

Are Disinvestments targets met by the government?

• Except in a few years, the government fails to reach the disinvestment target each year.
• In the current year of 2020-21, less than 3% of the targeted revenue is generated through disinvestment as of November 2020.

Source: Indian Express