Why disinvest when profits are booming?
Disinvestment is back. Policy-makers believe that there is no reason to oppose it, since at least 51 per cent of the equity holding in the public sector enterprises (PSEs) would continue to remain with the government, which would retain their managerial control. However, this calls for revisiting the arguments for disinvestment, and asking whether the PSEs’ recent performance calls for a sale of public sector equity.
Disinvestment is back. Policy-makers believe that there is no reason to oppose it, since at least 51 per cent of the equity holding in the public sector enterprises (PSEs) would continue to remain with the government, which would retain their managerial control. However, this calls for revisiting the arguments for disinvestment, and asking whether the PSEs’ recent performance calls for a sale of public sector equity.
Dilution of public ownership is meant to bring down the fiscal deficit, thus potentially reducing the adverse inflation and balance of payment effects. Growing fiscal deficit could also lead to downgrading of the nation’s credit rating, raising the cost of international borrowing. Disinvestment is also expected to impart stock market-based discipline on enterprises’ performance, and reducing their losses.
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