Objectives of Disinvestment

You must understand that the following are the main goals of the disinvestment policy:

1. To reduce the financial burden on government

2. To improve public finances

3. To introduce competition and market discipline

4. To improve growth

5. To encourage wider share of ownership

6. To de-politicise essential services.

Arun Shourie, former Disinvestment Minister, on December 9, 2002, stated the following objectives of disinvestment:

You must note that the primary objective of disinvestment is to put national resources and assets to optimal use and in particular, to unleash the productive potential inherent in public sector enterprises. The policy of disinvestment specifically intends at:

1. Modernisation and upgradation of public sector enterprises;

2. Creation of new assets;

3. Generating of employment; and

4. Retiring of public debt.

The government would continue to make sure that disinvestment does not lead to alienation of national assets, which, with the process of disinvestment, remain where they are. It will also make sure that disinvestment does not result in private monopolies. In order to offer complete visibility to the government’s sustained commitment of utilisation of disinvestment proceeds for social and infrastructure sectors, the government would establish a Disinvestment Proceeds Fund. This Fund will be utilised for financing fresh employment opportunities and investment, and for retirement of public debt.