Advantages of disinvestment to government & people

Arjama Mukherjee[DM14D08]

Outline• What is disinvestment ?• How government disinvest ?• Why government disinvest ?

Redefining disinvestment• Conversion of securities into

cash• Selling or Liquidating an

Asset or Subsidiary. • Divestment or Divestiture• Strategic move for raising

resources to meet general or specific needs.

Source: investopedia.com

Methods of disinvestment• Strategic sale – U.S. government giving

up control of the Internet to ICANN• Capital market – SAIL offering 5% of its

stake at @Rs83 per share• Auction – Government selling 2G

spectrum via auction• Sales to employee – SAIL selling some of

its share to its employee

Source: tradingeconomics.com

Disinvestment helping government• It will generate money to reduce fiscal deficit• Government utilizes these funds for welfare of public• It will improve efficiency and abilities of organization• Loss making PSU's will make profit• Private sector have huge money to invest so it will improve infrastructure,

technical efficiency• It will change the attitude of lazy employees and will improve their

efficiency

Source: economictimes.com

Disinvestment helping people• Relief from tax burden• 75% of revenue generated are utilized

in promoting health and education• Better service experience• Freedom from bureaucracy and red

tapes• Modernizations through technology• Encouraging entrepreneurs

Conclusion• Disinvestment helps government to tackle fiscal deficit• Eases the burden of tax• “It’s not government business to do business”

- PM Narendra Modi• Government during crisis can either go for disinvestment

or adopt Gujarat model.

Any Questions

Thank You