Relevance: Mains: G.S paper III: Indian Economy
Context
- Recently the Cabinet has decided to approve strategic disinvestment of the government’s shareholding in five public sector enterprises including Bharat Petroleum Corporation Limited, Shipping Corporation of India and the Container Corporation of India.
- In this context, it is necessary to understand the meaning of disinvestment, its need, issues and way forward.
What is disinvestment?
- Public Sector Enterprises have Government shareholding not less than 51% and disinvestment is the process of reducing the government shareholding in such companies.
What are the reasons for this decision?
- The government has a ₹1.05 lakh crore disinvestment target of which, only ₹17,364 crores has been realised till now.
- A massive shortfall in revenue and capital receipts — as of September 30, net tax revenue had only reached 36.8% of the budget estimate of ₹16.5 lakh crore for the full year, while non-debt capital receipts(disinvestment etc.) were at 17.2% of the fiscal’s target of about ₹1.2 lakh crore according to the Controller General of Accounts.It is aimed at helping the government narrow the yawning fiscal gap.
What are the underlying issues?
- It is alleged that the lack of an explanation for the logic behind the move also hints at politics taking precedence over any economic interest.
Way forward
- Thus it is opined that only 4 more months left in the present fiscal year, the government needs to move ahead with its decision of disinvestment fast.