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

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40 comments Page 1 of 4.

Uttara said:   7 years ago
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.

Mona said:   1 decade ago
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.

Ashutosh singh said:   1 decade ago
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.

Dhiraj yadav said:   1 decade ago
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.

Mukesh jha said:   1 decade ago
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.

Rajat said:   1 decade ago
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.

Samb29 said:   10 years ago
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.

Deepak.v said:   1 decade ago
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.

Neeraj bhatt said:   1 decade ago
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.

Vijendra said:   1 decade ago
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.


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.

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