{"id":86851,"date":"2026-10-15T18:12:47","date_gmt":"2026-10-15T12:42:47","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=86851"},"modified":"2026-10-15T18:15:30","modified_gmt":"2026-10-15T12:45:30","slug":"disinvestment-policy-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/15-10-2026\/disinvestment-policy-india","title":{"rendered":"Disinvestment and Fiscal Management in India"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Cabinet Committee on Economic Affairs approved the strategic sale of a 60.72% stake in IDBI Bank to Fairfax Financial Holdings for \u20b952,878 crore despite nearing its annual target.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Disinvestment Policy of the Government of India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Government policy on disinvestment consists of; <\/strong>Strategic Disinvestment\/ Privatisation and Minority Stake Sale in CPSEs.<\/li>\n\n\n\n<li><strong>Strategic disinvestment <\/strong>implies the entire or substantial sale of the government shareholding of a CPSE along with the <strong>transfer of management control.\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>In case of privatisation,<\/strong> which is a <strong>subset of strategic disinvestment,<\/strong> the government equity in CPSE and its management control is transferred to a private strategic buyer(s), and in other cases of strategic disinvestment, the government equity is transferred to another CPSE along with control.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Minority stake sales<\/strong> in certain CPSEs are carried out without transfer of management control through various SEBI-approved methods like Initial Public Offer (IPO), Offer for Sale (OFS), buyback of shares, etc. These methods play an important role in strengthening the capital market through:\n<ul class=\"wp-block-list\">\n<li>Increasing the float of well-performing CPSE&#8217;s;<\/li>\n\n\n\n<li>Providing opportunity to retail investors to participate in an extended range of stocks and<\/li>\n\n\n\n<li>Increasing liquidity and depth of the capital market.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>New Public Sector Enterprise (PSE) Policy<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>The New Public Sector Enterprise (PSE) Policy<\/strong> for Atma Nirbhar Bharat, which provides overall guidance on strategic disinvestment, <strong>was notified in 2021<\/strong>, with the approval of the Cabinet.\n<ul class=\"wp-block-list\">\n<li>The policy intends to minimise the presence of government in the PSEs across all sectors of the economy.<\/li>\n\n\n\n<li>Existing CPSEs, Public Sector Banks and Public Sector Insurance Companies to be covered under it.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Two-fold classification<\/strong> of Sectors to be disinvested;\n<ul class=\"wp-block-list\">\n<li><strong>Strategic Sector:<\/strong> Bare minimum presence of the public sector enterprises and remaining to be privatised or merged or subsidiarized with other CPSEs or closed. Following <strong>4 sectors<\/strong> to come under it;\n<ul class=\"wp-block-list\">\n<li>Atomic energy, Space and Defence<\/li>\n\n\n\n<li>Transport and Telecommunications<\/li>\n\n\n\n<li>Power, Petroleum, Coal and other minerals<\/li>\n\n\n\n<li>Banking, Insurance and financial services.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Non-Strategic Sector: <\/strong>In this sector, CPSEs will be privatised, otherwise shall be closed.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why Is the Government Continuing Disinvestment?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Rising subsidy expenditure: <\/strong>Disruptions linked to the <strong>West Asian conflict <\/strong>and the Strait of Hormuz have increased expenditure pressures, particularly on fertiliser and oil-related support.<\/li>\n\n\n\n<li><strong>Higher-than-anticipated fertiliser subsidy requirements: <\/strong>Against a Budget estimate of <strong>\u20b91.71 lakh crore for FY 2026\u201327,<\/strong> expenditure on urea and nutrient-based fertiliser subsidies reached <strong>\u20b91.03 lakh crore<\/strong> during April\u2013August.<\/li>\n\n\n\n<li><strong>Fiscal deficit management: <\/strong>The government has targeted a fiscal deficit of 4.3% of GDP in FY 2026\u201327. Additional non-debt receipts can help finance expenditure and reduce borrowing requirements, all else being equal.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Significance of Disinvestment<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Improves operational efficiency: <\/strong>Private participation can introduce stronger commercial incentives, professional management and improved accountability.<\/li>\n\n\n\n<li><strong>Reduces the fiscal burden: <\/strong>It can reduce the need for government support to loss-making or underperforming enterprises.<\/li>\n\n\n\n<li><strong>Promotes competition:<\/strong> Private participation can improve service quality, encourage innovation and strengthen competition in sectors where adequate safeguards exist.<\/li>\n\n\n\n<li><strong>Unlocks public assets:<\/strong> Disinvestment can help realise the value of government investments and make capital available for alternative public uses.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What are the Concerns?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Uncertain market conditions:<\/strong> Weak investor sentiment, volatile valuations and sector-specific risks can delay transactions or reduce sale proceeds.<\/li>\n\n\n\n<li><strong>Valuation concerns: <\/strong>Selling public assets below their fair economic value can result in a long-term loss to the public exchequer.<\/li>\n\n\n\n<li><strong>Employment concerns:<\/strong> Employees may face uncertainty regarding job security, service conditions and future restructuring.<\/li>\n\n\n\n<li><strong>Revenue uncertainty: <\/strong>Disinvestment is a one-time source of receipts and cannot sustainably substitute for recurring tax revenues.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Concluding remarks<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Disinvestment can strengthen fiscal management by unlocking public capital and improving the efficiency of commercial enterprises, but it is <strong>not a substitute for sustainable revenue generation.\u00a0<\/strong><\/li>\n\n\n\n<li>A transparent, strategically calibrated approach that balances fiscal needs, economic efficiency, public interest and long-term asset value is essential for ensuring that disinvestment contributes to inclusive and sustainable growth.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-group has-background\" style=\"background-color:#ebecf0\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<h3 class=\"wp-block-heading\"><strong>Department of Investment and Public Asset Management (DIPAM)<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>The Department of Disinvestment<\/strong> was set up as a <strong>separate department in 1999.<\/strong>\n<ul class=\"wp-block-list\">\n<li>It has been renamed the Department of Investment and Public Asset Management (DIPAM) from 2016.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>As per the present allocation of business rules, the mandate of the Department is as follows:\n<ul class=\"wp-block-list\">\n<li>All matters relating to the <strong>management of Central Government investments in equity,<\/strong> including the disinvestment of equity in Central Public Sector Undertakings.<\/li>\n\n\n\n<li>All matters relating to the<strong> sale of Central Government equity through offer for sale or private placement or any other mode<\/strong> in the erstwhile Central Public Sector Undertakings.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/business\/centre-disinvestments-meeting-target-idbi-bank-deal-10922529\/\" target=\"_blank\" rel=\"noopener\"><strong>IE<\/strong><\/a><strong>, <\/strong><a href=\"https:\/\/dipam.gov.in\/vision-mission\" target=\"_blank\" rel=\"noopener\"><strong>DIPAM<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong> Context <\/strong><\/p>\n<li class=\"ms-5\"> The Cabinet Committee on Economic Affairs approved the strategic sale of a 60.72% stake in IDBI Bank to Fairfax Financial Holdings for \u20b952,878 crore despite nearing its annual target. <\/li>\n<p><\/p>\n<p><strong> Disinvestment Policy of the Government of India <\/strong><\/p>\n<li class=\"ms-5\"> Government policy on disinvestment consists of; Strategic Disinvestment\/ Privatisation and Minority Stake Sale in CPSEs. <\/li>\n<li class=\"ms-5\"> Strategic disinvestment implies the entire or substantial sale of the government shareholding of a CPSE along with the transfer of management control.\u00a0 <\/li>\n<p><a href=\" https:\/\/www.nextias.com\/ca\/current-affairs\/15-10-2026\/disinvestment-policy-india \" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-86851","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/86851","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=86851"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/86851\/revisions"}],"predecessor-version":[{"id":86855,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/86851\/revisions\/86855"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=86851"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=86851"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=86851"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}