9.14          ndian    onom
     closed.43 There was an emphasis on increasing                  tyPes of Disinvestment
     functional autonomy of public sector organisations
                                                                    Since the process of disinvestment was started in
     to improve their efficiency in the 1980s in India
                                                                    India (1991), its consisted of two official types. A
     as part of the public sector reforms. Once the
                                                                    brief discussion on them is given below:
     process of economic reforms started in the early
     1990s, disinvestment became a part of the public               1. Token Disinvestment
     sector reforms. The C. Rangarajan Commission
     on Disinvestment of the Public sector Enterprises              Disinvestment started in India with a high
     (1991) went on to suggest the government on the                political caution—in a symbolic way known as
     issue in a highly commendable and systematic way,              the ‘token’ disinvestment (presently being called
     taking empirical notes from the experiences of                 as ‘minority stake sale’). The general policy was to
     disinvestment around the world. The government                 sell the shares of the PSUs maximum upto the 49
     started the process of disinvestment in 1991 itself.           per cent (i.e., maintaining government ownership
     In 1997 the goverment did set up a Disinvestment               of the companies). But in practice, shares were
     Commission to advice upon the various aspects of               sold to the tune of 5–10 per cent only. This phase
     the disinvestment process. The financial year 1999–            of disinvestment though brought some extra
     2000 saw a serious attempt by the government to                funds to the government (which were used to
     make disinvestment a political process to expedite             fill up the fiscal deficit considering the proceeds
     the process of disinvestment in the country—first              as the ‘capital receipts’) it could not initiate any
     a Disinvestment Department and later a full-                   new element to the PSUs, which could enhance
     fledged Ministry of Disinvestment was set up.44                their efficiency. It remained the major criticism
     The new government (UPA) dismantled the                        of this type of disinvestment, and experts around
     Ministry of Disinvestment and today only the                   the world started suggesting the government to
     Department of Disinvestment is taking care of the              go for it in the way that the ownership could be
     matter, working under the Ministry of Finance.                 transferred from the government to the private
                                                                    sector. The other hot issue raised by the experts
                                                                    was related to the question of using the proceeds of
       43.  As was done by Margaret Thatcher in the          in the
            mid       s. Her rand of privatisation was driven y     2. Strategic Disinvestment
            the conviction that government control ma es S s
            inherently less efficient and privatisation therefore
                                                                    In order to make disinvestment a process by
            improves its economic efficiency and is good for the    which efficiency of the PSUs could be enhanced
            consumers. However, this idea has been rejected around  and the government could de-burden itself of the
            the world on the empirical bases. A PSUs could also
                                                                    activities in which the private sector has developed
            have comparable economic efficiency even being
            under full government control. This was followed by     better efficiency (so that the government could
               rs. hatcher             forcefully in reat ritain    concentrate on the areas which have no attraction
            conjoined with the supply-side economics as was done    for the private sector such as social sector support
              y onald eagan                in the nited States as
            discussed by P.A. Samuelson and W.D. Nordhaus,          for the poor masses), the government initiated the
            Economics ew elh            ata c raw Hill,           , process of strategic disinvestment. The government
            p.     .                                                classifying the PSUs into ‘strategic’ and ‘non
       44.  A highly experienced person from the media world,       strategic’ announced in March 1999 that it will
            Arun Shourie remained the Minister for the whole term
            of the NDA government. Some highly accelerated and      generally reduce its stake (share holding) in the
            successful disinvestments were done during this period  ‘non-strategic’ public sector enterprises (PSEs)
            but not without controversies.