Finance minister Nirmala Sitharaman said that the government expects to disinvest or sell a stake in 5 PSUs

This strategic disinvestment is expected to help the government meet its divestment target of `1 lakh crore in the current fiscal year

But what exactly is disinvestment to begin with?

Simply put, disinvestment is when an organisation or government sells or liquidates an asset or a subsidiary

Disinvestment can be called the opposite of investment and it consists of turning asset classes into money or cash

So in this case, disinvestment involves the government selling
its stake in a public sector undertaking to other market players in that sector

The government can also chose to take the public issue route and list in the stock market or opt for share buybacks and exchangetraded funds

Disinvestment is primarily of three types Minority, majority and total

If the government sells a small portion and its stake remains 51% or more, it is a minority disinvestment

Majority disinvestment happens when the government sells off a major stake

And total disinvestment is when 100% control is given to the buyer

So why would the government want to disinvest?

Over the years the NDA government has made several PSU disinvestments to raise money

The main motive of disinvestment is that it helps the government make up for its financial burdens

It also helps raise capital to put in other projects

Now what has the story of disinvestment been in India?

The process of first disinvestment started with the economic reforms of 199192…

…As inefficient and lossmaking PSUs had become a drag on the government’s resources

Disinvestment got a muchneeded boost during the Atal Bihari Vajpayee regime, when Arun Shourie was appointed the minister for disinvestments

Major PSUs like Bharat Aluminium Company (BALCO), Hindustan Zinc, Indian Petrochemicals Corporation Limited and VSNL were given out to private players

The disinvestments have picked up pace under the current government

Recent disinvestments include the listing of IRCTC in the stock market, reducing the government’s share to about 87.40%

ONGC’s acquisition of HPCL was also another kind of strategic disinvestment

According to a 2018 report by the Department of Investment and Public Assets Management, the Modi government has been responsible for over `2 lakh crore worth of disinvestments

This figure translates to about 58% of all disinvestments since 1991


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