Page 208 - DECO303_INDIAN_ECONOMY_ENGLISH

Unit 12: Privatisation and Economic Reforms

The salient features of the Policy are: Notes
1. Public Sector Undertakings are the wealth of the Nation and this wealth should rest in the
hands of the people.

2. Citizens have every right to own part of the shares of Public Sector Undertakings.
3. When pursuing disinvestment, Government has to retain majority shareholding, i.e., at
least 51% and management control of the Public Sector Undertakings.

12.2.4 Approach for Disinvestment

You may already be aware that on 5th November 2009, Government approved the following
action plan for disinvestment in profit making government companies:
1. Already listed profitable CPSEs (not meeting compulsory shareholding of 10%) are to be
made compliant by ‘Offer for Sale’ by Government or by the CPSEs through issue of fresh
shares or a grouping of both.
2. Unlisted CPSEs with no accumulated losses and having earned net profit in three former
consecutive years are to be listed.
3. Follow-on public offers would be assumed taking into consideration the needs for capital
investment of CPSE, on a case by case basis, and Government could at the same time or
independently offer a portion of its equity shareholding.
4. In all cases of disinvestment, the Government would preserve at least 51% equity and the
management control.

5. The Department of Disinvestment is to recognise CPSEs in consultation with respective
administrative Ministries and submit proposal to Government in cases needing Offer for
Sale of Government equity.

!
Caution All cases of disinvestment are to be decided on a case by case basis.

12.2.5 Disinvestments of Equity in Public Sector

It is important for you to know that the change process in India initiated in the year 1991-92 and
within that year, 31 selected PSUs were disinvested computing an aggregate equity of ` 3,038
crore as shown in Table 12.1. In the decade 1991-92 to 2000-01, this sum rose to ` 20,506 crore as
against the target of ` 54,300 crore. The details are as follows:
Table 12.1: Disinvestments in Public Sector 1991-92 to 2004-05

Year Target Realisation
1991-92 2,500 3,038
1992-93 2,500 1,913
1993-94 3,500 0
1994-95 4,000 4,843
1995-96 7,000 362
1996-97 5,000 380
1997-98 4,800 902

Contd...

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