Context: Despite favourable market conditions, the government has raised less than three per cent of budgeted revenues from disinvestment.

• The tardy pace of sales of these public assets during the year implies that the government is unlikely to meet its target.

Background

• The Union government invests in several public sector undertakings (PSUs) such as Air India, Bharat Petroleum, Delhi Metro Rail Corporation etc.
• As the government is the majority shareholder (meaning that it owns more than 51% of the shares), the Centre can raise money through the liquidation of its shareholding in these PSUs.
• According to the latest data on the Controller General of Accounts (CGA) website, only Rs 6,179 crore of the total budgeted amount for 2020-21 has been generated through disinvestment as of November 2020.

Disinvestment

• It means sale or liquidation of the public assets by the government. These are usually Central and state public sector enterprises, projects or other fixed assets.
• The government can sell its shares, where it is the majority shareholder (Owns more than 51% of shares). For example, Air India, Bharat Petroleum, Delhi Metro Rail Corporation, etc.
• The government can either reduce its share by selling a part of the company or can transfer its ownership to the highest bidder.

Main objectives of Disinvestment in India

• Reducing the fiscal burden on the exchequer
• Improving public finances
• To improve the overall efficiency of PSUs
• Funding growth and development programmes
• Maintaining and promoting competition in the market

Nodal Department: Department of Investment and Public Asset Management(DIPAM) under the Ministry of Finance, handles the disinvestment-related works for the government.
Are Disinvestments targets met by the government?

• Except in a few years, the government fails to reach the disinvestment target each year.
• In the current year of 2020-21, less than 3% of the targeted revenue is generated through disinvestment as of November 2020.