|




 

| 

 

 Historically the public sector had been assigned an important role.

 The new LPG policy de-emphasized the role of the public sector.

 PSUs has been characterized by low productivity, unsatisfactory

quality of goods, excessive manpower utilization & low rate of
return on capital.

 PSUs have become burden to the government.

 The government clearly wants to get rid off.

 Govt., has adopted a new approach to reform & improve the PSUs
performance i.e 'Disinvestment policy'.
 |

 Ynvestment is an art & science, whereas, the disinvestment is a

process.
 Disinvestment involves the sale of equity & bond capital invested
by the government in PSUs.
 Yt selling off partially or wholly the assets of state owned
undertakings to private sector.
 The transfer of ownership may occur when in an enterprise the
dilution of government ownership is beyond 51 percent.
 Obviously, private sector comes to influence or fully control the
management & production decisions of the firms concerned.

 Yt is the process through which privatisation could take place.


 !



i. Price policy of public sector undertakings

ii. Under ± utilization of capacity

iii. Problem related to planning and construction of

projects

iv. Problems of labour, personnel and management

v. Lack of autonomy
 "!|

1. To reduce the financial burden on government.

2. To improve public finances.

3. To introduce, competition and market discipline.

4. To encourage wider share of ownership.

5. Appropriate private investment would increase

economic activity.

 #$



 ring down the Government equity to 26% or lower.

 Re-structure the potential and viable PSUs.

 Close down PSUs that cannot be revived.

 To protect the interest of the workers.

  !|


  !!% mquity was offered to retail investors through
domestic public issues. Yt was adopted in the early 1990¶s.

  & '% Govt. would sell part of one PSU to other
PSU¶s. This is used in MUL in 2006.

 o$('% govt., owned financial institutions were

expected to buy the share of PSU¶s & hold them until any
third buyer emerged.

  
($% Govt. retains 26% stake in the PSU, but not
less than this.


$' $ % Government is saling above 51% shares.

 |


 Proposal of disinvestment are placed for consideration of Cabinet

Committee on Disinvestment

 An Advisor is appointed to invite mxpression of Ynterest(mOY from

parties.

 Task of valuation of PSU is undertaken.

 Ynvite the final bidding.

 ids are placed before CCD for the final approval.

 After transaction is completed, all papers are given to CAG for

placing it to the parliament.
  !(|
 )
*++*,+-

( Y The Ynitial Phase

 1991-92 Ynterim udget  á
   
   


     á
  
 

 Yndustrial Policy Statement
24.7.1991  á
  
    
      



 Rangarajan Committee-        



April,1993  
         

   

      
( YY The Second Phase
 udget speech-1998-1999
 ! "
      
# 
$      




 Cabinet decision dated  %       &%'(
16.3.1999 
 
  
 )
       



 O



 udget speech 2000-2001  |    

   *    )
% 
   +

 Decision dated 23.6.2000  |         


  á!,-#
,.%/ .0á%
 Decision dated 7.9.2002  %# á
 
% 
  
& á
'   12   (
 
   
     



 udget Speech 2003-04  |    
   
|

  


 udget Speech 2004-05  á
    3 

 
4          
(July 2004 &34(  3 
 

  á
 
    *    %
 Decision dated 27.01.2005  á

 

#     
 12        
 
 |



  

O 

Uear Target Proceeds % Achievement

1991-91 2,500 3,038 122
1992-93 2,500 1,913 77
1993-94 3,000 0 0
1994-95 4,000 4,843 121
1995-96 7,000 362 5
1996-97 5000 380 8
1997-98 4,800 902 19
1998-99 5,000 5,371 107
1999-00 10,000 1,860 19
2000-01 10,000 1,871 19
2001-02 12,000 5,632 47
2002-03 12,000 3,348 28
2003-04 14,500 15,547 107
Total 92,300 45,067 49
 $! #
!
|

 Unfavorable market conditions

 There is no clear-cut policy.
 A meager amount of disinvestment proceeds has been realized as
against the target.
 Offers made by the government were not attractive for private sector
investors.
 Lot of hue and cry being made on valuation process.
 Government has no clear-cut policy on disinvestment.
 Strong opposition from employee and trade unions.
 Lack of transparency in the whole process.
 Lack of political will.