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CURRENT POLICY ON DISINVESTMENT
The policy on disinvestment has been articulated in paragraph 34 of President’s Address to Joint Session of Parliament on 4th June, 2009 and reads as under:
Our fellow citizens have every right to own part of the shares of public sector companies while the Government retains majority shareholding and control. My Government will develop a roadmap for listing and people-ownership of public sector undertakings while ensuring that Government equity does not fall below 51 %.
The above policy was reaffirmed by the Finance Minister in paragraph 37 of his Budget Speech on 6th July, 2009. Paragraph 37 of FM’s Budget Speech reads as :
The Public Sector Undertakings are the wealth of the nation, and part of this wealth should rest in the hands of the people. While retaining at least 51 per cent Government equity in our enterprises, I propose to encourage people’s participation in our disinvestment programme. Here, I must state clearly that public sector enterprises such as banks and insurance companies will remain in the public sector and will be given all support, including capital infusion, to grow and remain competitive.
The Government, on 5th November 2009 has approved the following action plan for disinvesting Government equity in profit making CPSUs :
i) Already listed profitable CPSUs, not meeting the mandatory public shareholding of 10%, are to be made compliant;
ii) All CPSUs having positive net worth, no accumulated losses and having earned net profit for the three preceding consecutive years are to be listed through Public Offerings, out of Government shareholding or issue of Fresh Equity by the company or a combination of both; and
iii) The proceeds from disinvestment would be channelized into National Investment Fund and during April, 2009 to March, 2012 would be available in full for meeting the capital expenditure requirements of selected social sector programmes decided by the Planning Commission / Department of Expenditure. The status quo ante will be restored from April, 2012.
Approach to Disinvestment
The Department of Disinvestment to dialogue with Administrative Ministries to identify CPSUs for disinvestment. As each CPSU has different capital structures, financial strength and differing status in compliance with mandatory listing requirements, each disinvestment to be considered on a case-by-case basis for approval by Government