1. Token Disinvestment

Disinvestment started in India with a high political caution—in a symbolic way known as the ‘token’ disinvestment (presently being called as ‘minority state sale’). The general policy was to sell the shares of the PSUs maximum

upto the 49 per cent (i.e., maintaining government ownership of the companies). But in practice, shares were sold to the tune of 5–10 per cent only. This phase of disinvestment though brought some extra funds to the government (which were used to fill up the fiscal deficit considering the proceeds as the ‘capital receipts’) it could not initiate any new element to the PSUs, which could enhance their efficiency. It remained the major criticism of this type of disinvestment, and experts around the world started suggesting the government to go for it in the way that the ownership could be transferred from the government to the private sector. The other hot issue raised by the experts was related to the question of using the proceeds of disinvestment.