Trends in Disinvestment of Government’s Equity: An Explicatory Study of Public Sector Enterprises in India

Abstract

A Public Sector Enterprise (PSE) is an enterprise which is owned and proscribed by the Local, or State or Central Govt. In a civic enterprise, the investment is either entirely or partially made by the Govt. Under PSEs, the Central Public Sector Enterprises (CPSEs) occupy an important position in the economy. They were set up to achieve fiscal development, self-support in manufacturing, intemperance equilibrium of expenditure, and controlling the deflationary and inflationary trends. These macro-economic objectives are taken as an instrument for structural change of the nation with equality and social fairness. Disinvestment is a process in which the Govt. equity fund is introverted either in fraction or in totality. The Govt. of India introduced the process of disinvesting its equity shares in Indian PSEs in the fiscal year 1991-92.  The prime tenet at the back of disinvestment is to boost prosperity, endorse public partaking at wider scale and to bring improved market answerability. In this backdrop, the present study is an attempt to analyze the trends in disinvestment of Government’s equity in Indian PSEs during the period 1991-92 to 2019-20. For this purpose, secondary information has been sourced from the available yearly reports of the Public Enterprises Survey, Govt. of India. Overall, a low level of disinvestment is observed during the initial years (i.e., up to 2008-09). Thereafter, more or less an increasing trend is observed in actual disinvestment as compared to actual disinvestment in the earlier years. The real proceeds from disinvestment have fluctuated at certain point of time during the period under study. Furthermore, actual receipts from disinvestment are less than that of the budgeted receipts in most of the years under study.