Is disinvestment really that good for India or is a rethink in order?


Group Discussion

Points to remember before you participate in this discussion:

  • Assume, you one of the member of a real group discussion.
  • Take the initiative to participate and contribute your thoughts.
  • Express your positive attitude towards providing the solution.
  • Post your answer now.

Uttara said: (Aug 4, 2017)  
Disinvestment means diluting partial or full government ownership to the private sector. Thus in generates huge amount for govt to use the amount in productive purposes. It helps the loss making PSUs to get private improved technologies. When govt decides to disinvest in any sector it takes account of the pros and cons and all the existing possibilities and it is only done when govt's interest of public welfare is not in jeopardy. In that perspective, disinvestment is good for the nation. As it minimises govt corruption to some extent. Makes PSUs more competitive. But there is a risk to it also. Private players may fall in the face of diversities then govt needs to rethink about buybacks of the shares. It happened in Australia where public Airways could not run in the hands of private players and at the end govt of Australia again had to take charge of the airway. So there is always an option open of the govt to reinvest in future when there is enough resources at hand.

Rate this: +4 -0


Sandeep said: (Jan 19, 2017)  
Yes, it is very useful to collect the money in this manner which will show impact on the welfare of the of people.

Rate this: +4 -0


Bansal Kumar said: (Aug 9, 2016)  
Yes, It is really important for India.
Importance of disinvestment lies in utilisation of funds for-

1. Financing the increase fiscal deficit.
2. Financing the large-scale infrastructure development.
3. For investing in the economy to encourage spending.
4. For the social programs like health and education.

Disinvestment also assumes significance due to the prevalence of an increasingly competitive environment which makes it difficult for many PSUs to operate profitably this leads to a rapid erosion of the value of the public assets making it critical to disinvest early to realize a high value.

Rate this: +10 -8


Namrata said: (Apr 4, 2016)  
Loss-making PSU disinvestment will be a good idea. But PSU which is making a profit are good for the society as they generate respectable salary jobs and also profits are government money which is used for the society. PSU are provided competition to private players and keep the cost of goods or services in control. PSU working is more transparent. Nowadays we can see many private players/industrialist are involved in corruption. So PSU is good for our country if they are making the profit.

Rate this: +8 -12


Optimisteconomist said: (Feb 28, 2016)  
Divestment is really going to infuse funds in the government safe but it may at the same time have to let go the robust dividends it is receiving by the investments in the PSUs. Government divestment target for 2015-16 was (which is now reduced to Rs. 30k Cr) to collect Rs. 70,000 Cr.

But GOI fetched Rs. 36,000 Cr from dividends through PSU investments in 2014-15 and that too with such an inefficient PSUs. Therefore, policymakers should focus on improving the operational efficiency and not just on getting rid of those investments.

Rate this: +4 -5


Theeconomywizard said: (Feb 28, 2016)  
Disinvestment may help infuse funds which can reduce CAD. But government gets robust funds from the investment in PSUs.

In 2015-16, it is expected that government is to receive Rs. 36000 cr from dividends. That amounts to the half of the annual disinvestment target for 2015-16. And that to with such an inefficient PSUs. Stake sale can definitely reduce this income.

So, focus should be on to improve the operational performance of PSUs n not on the stake sale. Government of India should treat them as growth engines.

Rate this: +5 -4


Sherlock said: (Feb 27, 2016)  
Disinvestment is instrument which is used well will certainly be benevolent for the economy but on the other side too much divestment will cause unfavorable monopoly in the market.

Rate this: +3 -2


David said: (Jan 9, 2016)  
Disinvestment is necessary to get rid of financial burdens of government in PSU's which are under-performers but it should not go to a level where everything is privatized because there are more poor people in India.

Rate this: +8 -4


Pooja said: (Feb 24, 2015)  
Disinvestment in a controlled manner is good. As it will help the government to raise fund and bring in latest technology by making private players to contribute in GDP.

Rate this: +4 -5


Samb29 said: (Sep 10, 2014)  
Disinvestment itself is not the pill to inefficiency in PSUs. Inefficiencies come from interference by govt authorities in operation abilities, lethargic workforce-- less incentive to work (undue influence, less employee care and favoritism in promotions) , improper skill development of employees, nonavailability of art of technology, and less freedom to work. For all this problems PSUs need to be given more autonomy (non interference) then, PSUs will become income generating assets of government for short term money requirement government is trying to this invest and this will not solve all the problems. There is no evidence that private organisations are resistant to collapse.

Rate this: +18 -4


N K Meena said: (Apr 1, 2014)  
To move economy from state economy to partially capitalistic economy is the part economic reform. Disinvestment is tools to provide autonomy in the economy that these effectively compete with international market standard and government burdon reduce in such a level that govt utilised the fund to mitigate fiscal deficit and added additional fund to plant development and critical areas.

Rate this: +3 -5


Deena Queen said: (Dec 12, 2013)  
Hi Friends,

Disinvestment of PSU's have a psychological impact among the investors. It makes them feel that there will be a good return and it leads to higher investments. As far as our country is concerned, we have a non-opposing workforce regarding disinvestment. This eventually will help boosting the capital market.

Rate this: +5 -6


Mona said: (Dec 7, 2013)  
Hello friends.

According to me disinvestment is good and crucial step of the government against inefficiency of PUSs.

We are investing in any sector or in any project with this expectation that we will get good and sound returns from there but when get negative response from there. We do not need to invest in such work.

Disinvestment is one of the good government's weapon which will provide the government that way which is necessary for our economy.

It reduces tension of huge investment in public sector.

With the help of this system government can better decision regarding social welfare of society because reduces government pressure at great extent.

With every decision has two side one is favourable and other one is unfavourable.

Disinvestment reduce the role of public sector and increases the role of private one by which economy of our nation moving towards inequality in society.

Rate this: +14 -13


Manish said: (Oct 13, 2013)  
Disinvestment is good up to a certain level because it generate huge funds & this fund could be deploy in social sector, subsidies & can reduce fiscal deficit as a revenue source & create good corporate governance but up to a certain level 49% as I think because above that level it direct economy towards private monopoly from state monopoly which is harmful for a country.

Rate this: +15 -5


Sagar Bodkhe said: (Sep 28, 2013)  
Undoubtedly disinvestment is good for our economy. Will definitely reduce the fiscal deficit. Which is one of the major concern of finance ministry today. The disinvestment commission was established with sole purpose of tackling the fiscal deficit problem. In early 90's when PSU's were giving negative returns. This will improve public-private participation in the PSU's. But what I think is that disinvestment should be kept below 50% to check the monopoly of the private sector in the fields directly / indirectly related to common man.

Rate this: +6 -4


Sanjay Akhouri said: (Aug 23, 2013)  
Disinvestment in PSUs would be a necessary boon in the present day fiscal deficit crisis which will also eventually suck excess liquidity from the economy thus check inflation. Further, the country can also meet the CAD if partially opened to FDIs thus support the depreciating Rupee. This will also help in good corporate governance and answer ability to stakeholders at large.

Rate this: +5 -3


Pralad Dessai said: (Jun 20, 2013)  
Disinvestment is not beneficial for Indian economy. Investment keeps the India going. Investing in share markets, banking sectors, industrial sectors generates a huge capital in India. Indian population is dependent on its economy. So we must keep on investing funds in the economy to raise it to a sufficient level.

Rate this: +8 -19


Poonam said: (May 13, 2013)  
Hi Friends, According to me disinvestment is really necessary for India. India is a developing country so it needs resources for their developing from other countries. Disinvestment really help to reduce this. Government Use money which they will get from disinvestment for country growth. Poor people will get the advantage from this. But government try to not disinvestment in necessary resources like Oil, Sugar etc.

Rate this: +5 -13


Vijendra said: (Mar 25, 2013)  
Disinvestment is good idea to generate funds for government :

It will generate money to reduce fiscal deficit.

Govt. Can utilizes these funds for welfare of public.

It will improve efficiency and abilities of organisation.

Lose 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.

But,

Disinvestment should be avoided in the sectors which directly connected to common people like oil, sugar etc.

There should not be monopoly of private players.

Rate this: +45 -4


Rajat said: (Jan 20, 2013)  
Disinvestment is extremely important for the economy. Some of the advantages are.

1. Helps in generation of funds for the government.

2. Helps in turning around loss making units and thereby create greater value for the shareholders and customers.

3. Provides greater time and resources for the government for core activities which is governance of the people.

However, certain control must be exercised before going for disinvestment as government Is losing its control.

1. Strategic resources like oil should be controller by govt. As they are critical for economy and people of the country.

2. Also employees should be taken into consideration before disinvestment to allay all their fears.

Rate this: +16 -4


Nitish said: (Jan 5, 2013)  
Disinvestment is beneficial for us. In economic point of view it given opportunities to private sector to participate in it and also handle and controlled for healthy growing. In social point of view the investment of money in public sector is used for social development. So it helps to create development of human being and life standard.

Rate this: +5 -6


Poonam said: (Sep 14, 2012)  
Hi Friends, Now today's is the time of competition. Everyone is part of this competition. Private sectors are growing very fast to compete with them public sector are coming forward and result is public and private sector partnership is growing. Private sectors are making the stratgic plans and public sector are investing money in them for public growth. That is good but government should keep on eye the whole procee means private sector may not create monopoly for that process should be in favor of people not for big and rich people.

Rate this: +8 -10


Neeraj Bhatt said: (Jul 20, 2012)  
Hello friends,

Disinvestment is good if we talk about India because of following reasons-.

1) Government will generate funds spontaneously if needed.

2) It will help poor in long run because government do disinvestment only in the hope of generating good returns which will be used for the improvement of the country in upcoming budgets.

3) As private owners will run the business it will be helpful for the infrastructure also as India's infrastructure is very much depends on private companies.

4) New technology will be used which will reduce the wastage of resources, presently which is not there in government comp.

Rate this: +22 -12


Ashutosh Singh said: (May 10, 2012)  
Hello friends.

In this age of globalization it is very necessary that the companies must update with the latest technologies of the time because they have to face the top class products of the entire world, and we all very well know the amount of technological knowledge that he the Indian public sector posses.

Therefor I highly feel that a certain amount of controlled disinvestment policy is very important (which is in fact being followed by the in Indian government) as the private companies will bring the latest technologies and management practices with them which would help in the development of the enterprise.

Moreover, this measure will help the government to lessen it burden of managing the enterprise and focus on much important objectives.

One of the best eg. of such practice is the U.S. Where high level of public private partnership occurs.

Rate this: +12 -5


Mukesh Jha said: (Apr 3, 2012)  
First of all I would like to say that disinvestment is done by the govt to get rid of equity problem. If govt have planned some proposal and he needs to inject some money to that particular project then some time govt might go through the disinvestment method to gather more and more fund.

So its helplessness of govt. Disinvestment is not good for the govt prospective. If govt will dis invest from any public sector unit due to emergence of fund. That will not only affect to govt profits but also help to corporate bodies to fetch more money in their pocket for their own sake. And if disinvestment will continue further that will lead to privatization which will not be good for our economy because they will monopolize the market.

Rate this: +9 -6


Uttam Kumar said: (Feb 22, 2012)  
As i think if we understand the concept of disinvestment then definitely we will say we must do disinvestment.To understand clerly we take the example of insurence company, the money that we give as premium to them if they will not invest in other company then how they will generate profit.

Rate this: +4 -18


Deepak.V said: (Feb 12, 2012)  
1st we need to understand are we talking about fully disinvestment or partially because opinions differ in both cases. Partial investment is good irrespective of profit making psu or not if govt needs money & can't find any other effective way to raise funds as in current situation to meet the fiscal deficit govt has made a target of raising funds of Rs 40, 000 crore by divesting its stake in bhel, ongc & other psus & all are making profits & it is partial disinvestment so govt won't loose cntrl & anytym they can buyback when they get surplus of funds. & fully divestment is good when it is not govt's cup of tea.

Rate this: +21 -3


Purushottam Vishnu Deshmukh said: (Dec 31, 2011)  
Disinvestment policy is very harmfull to poor Indian as well as growth of inferastructure. This policy will establish monopoly of rich person. This is beganing of capitalist economy. Since it should be stop for general man.

Rate this: +10 -10


Manisha Yadav said: (Dec 20, 2011)  
Disinvestment is good as it helps in listing of goverment enterprises on stock exchanges which will ultimately led to improvement in corporate goverance,higher disclosures levels which will bring transperency and accountability in functioning and adding market discipline to it.

Rate this: +6 -4


Chiranjit said: (Nov 13, 2011)  
I think disinvestment is not good. Find out what is the reason for disinvestment and try to solve the problem. If not then country like India a developing nation can not grow. Govt should think about the ppp model as private sector can handle evrything properly so to help in economy and increase thew contribution in gdp we should focus more investment rather disinvestment.

Rate this: +9 -3


Chetan said: (May 24, 2011)  
Disinvestment should not be done totally, government should enter in to public private partnership where strategic decision making should be left to private players and funding part should be left to government this will not create monopoly of the private players as government would be monitoring body to protect interest of the society and nation.

Rate this: +30 -4


Dipti said: (May 15, 2011)  
Disinvestment of public sectors is good option only if it is running in loss. Disinvestment will help a psu in gaining the technological knowledge from the private sectors and learning their strategies in earning profits. Otherwise the percentage share of the government should always be more than 50% as it is the government which is inclined towards the betterment of the people, society and development of backward area and removes economic differences.

Rate this: +16 -2


Angika said: (May 6, 2011)  
No doubt disinvestment will bring good managers and help the company to improve the sale but the government should keep some points in mind.

No matter how much loss a company has beard, government should have some stakes so that they can figure out the positive changes. Next the private company should not indulge in monopoly. Government should share the insights of the deal to gain the confidence of the employees. We should keep in mind the consequences of what happened in BALCO.

Rate this: +11 -3


Aditya Saraf said: (Mar 25, 2011)  
Disinvestment is also a good techniquue to cover the fiscal deficit of the Goverment. The Goverment can cover up the difference of deficit by the process of disinvestment.By this process the loss making companies of India can be revived very soon and the this will also held in growth of the GDP.

Rate this: +6 -2


Himanshu Singh said: (Mar 16, 2011)  
When disinvestment comes in a mind that obviously means the company or sector is going through losses because of competitors or some other aspects so it is better to divest than completely lost and make it useful in other beneficiary sectors.

Rate this: +4 -2


Dhiraj Yadav said: (Mar 11, 2011)  
In todays era of globalisation and competition, if public sectors have to survive they have to evolve. And to evolve and be competitive enough with the private sectors and global players we need to be at par with them on many aspects viz marketing technology, cost effeciency, strategic colaborations etc. In absence of this the public sectors are bound to become obsolete, loss making and then sick.

Disinvestment allows private player havin the knowledge of the sector comes in the board and help the company take actions which will make it feasable project which was other wise loss making.

And might suggest for technological innovation.

And might infuse new good managers who can motivate the work force to work effectively and efficiently. And therby contributing toward the growth of the company.

Rate this: +15 -3


Abhihek said: (Aug 18, 2010)  
It is a brilliant initiative being taken by government of India.

Rate this: +3 -23


Sailesh said: (Jun 24, 2010)  
Disinvestment is good to improve effeciency and operational abilities of the firms. It will leave the Government to focus more on its core responsibilities of public welfare and safety.

Rate this: +4 -9


Is disinvestment really that good for India or is a rethink in order?

Name *:

Email   : (optional)

» Your comments will be displayed only after manual approval.