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Kerala PSC Indian Economy Book Study Materials Page 266Book's First Page
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 disinvestment. 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.