{"id":87641,"date":"2026-10-29T18:13:28","date_gmt":"2026-10-29T12:43:28","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=87641"},"modified":"2026-10-29T18:16:14","modified_gmt":"2026-10-29T12:46:14","slug":"disinvestment-in-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/29-10-2026\/disinvestment-in-india","title":{"rendered":"Disinvestment as Key Economic Strategy"},"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 government\u2019s approval of the<strong> strategic sale of its stake in IDBI Bank has renewed the debate on disinvestment <\/strong>as an instrument for fiscal consolidation, and increasing private-sector participation in the economy.<\/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<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<h2 class=\"wp-block-heading\"><strong>Significance of Disinvestment<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\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\n\n\n<li><strong>Revenue mobilisation:<\/strong> According to DIPAM data, the government mobilised \u20b962,124 crore through disinvestment and asset monetisation during April\u2013September 2026, including \u20b955,757 crore from disinvestment.\n<ul class=\"wp-block-list\">\n<li>The collections had reached approximately 78% of the full-year budget target of \u20b980,000 crore.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Managing expenditure pressures: <\/strong>Net tax revenue grew by 3.4% during April\u2013August 2026, while capital expenditure increased by over 18%.\n<ul class=\"wp-block-list\">\n<li>Disinvestment receipts can provide additional fiscal resources amid competing expenditure commitments.<\/li>\n<\/ul>\n<\/li>\n\n\n\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>Promotes competition:<\/strong> Private participation can improve service quality, encourage innovation and strengthen competition in sectors where adequate safeguards exist.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Challenges in India\u2019s Disinvestment Process<\/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<h2 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Disinvestment should be guided by<strong> long-term economic efficiency and the appropriate role of the state,<\/strong> rather than being driven solely by annual revenue targets.<\/li>\n\n\n\n<li><strong>Multiple valuation methods, transparent bidding and adequate competition <\/strong>should be used to ensure fair returns to the public exchequer.<\/li>\n\n\n\n<li>Disinvestment receipts should <strong>support capital formation and productive public investment <\/strong>wherever feasible, rather than becoming a substitute for sustainable fiscal management.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Concluding remarks<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Disinvestment can help reconcile the government&#8217;s developmental responsibilities with the need for greater economic efficiency and private-sector participation.\u00a0<\/li>\n\n\n\n<li>However, the long-term success of disinvestment must be measured by improvements in efficiency, asset utilisation and economic value creation, rather than revenue collections alone.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background has-fixed-layout\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Daily Mains Practice Question<\/strong><br><strong>[Q]<\/strong> Disinvestment is not merely a fiscal instrument but also a means of restructuring the role of the state in the economy. Discuss its significance, challenges and the measures required to make India&#8217;s disinvestment policy more effective.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/opinion\/op-ed\/disinvestment-as-key-economic-strategy\/article71637709.ece\" target=\"_blank\" rel=\"noopener\"><strong>TH<\/strong><\/a><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.nextias.com\/ca\/wp-content\/uploads\/2026\/10\/Daily-Editorial-Analysis-29-10-2026.pdf\"><strong>Download PDF<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Published on:<\/strong> 29 October, 2026<\/p>\n<p> The government\u2019s approval of the strategic sale of its stake in IDBI Bank has renewed the debate on disinvestment as an instrument for fiscal consolidation, and increasing private-sector participation in the economy. <\/p>\n","protected":false},"author":4,"featured_media":87646,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22],"tags":[],"class_list":["post-87641","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-editorial-analysis"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/10\/disinvestment-in-india.webp","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/87641","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\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=87641"}],"version-history":[{"count":1,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/87641\/revisions"}],"predecessor-version":[{"id":87643,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/87641\/revisions\/87643"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/87646"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=87641"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=87641"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=87641"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}