Q.24 Critically examine the recently announced disinvestment policy for the public sector undertakings.

Ans. A new disinvestment policy was announced by the Government by February 2016—pusing in favour of the ‘strategic disinvestment’. It will be better to call it a modification in the existing policy of 2009. As per the government, such policy implies “the sale of substantial portion of Government share holding of the PSUs of upto 50 per cent, or higher along with transfer of management control”. Main features of this policy are—

(i) To be undertaken through a consultation process among different Ministries, Departments and the NITI Aayog.

(ii) NITI Aayog to identify PSUs and advice on the mode of sale, percentage of shares to be sold and method for valuation.

(iii) Core Group of Secretaries on Disinvestment (CGD) to consider the recommendations of NITI Aayog to facilitate a decision by the Cabinet Committee on Economic Affairs (CCEA) on strategic disinvestment and to supervise/monitor the process of implementation.

The changed stance of the government regarding disinvestment policy is a borrowing from the past experiences of disinvestment. Strategic mode of disinvestment was started by the GoI in 1999–00 itself which was put on hold by the next Government in 2004. The new government announced a new policy which aimed at GoI owing at least 51 per cent stake in the divested PSUs believing in the ‘ideology’ that public has right to own national assets. The new policy has not changed this ideology but has taken a more dynamic stance.

The new policy of disinvestment should be seen in the backdrop of the newly begun process of the “comprehensive management of government investment in the PSUs”. Under it, the government has recognised its investment in the PSUs as an important asset and aims to optimise returns from it by its efficient use and attracting investment in the economy.