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Disinvestment ofPublic Sector Undertakings in India is a process of public asset sales done by thePresident of India on behalf of theGovernment of India. It can be directly offered for sale to theprivate sector or indirectly done through a bidding process.
The Public Enterprises Survey (2015–16), brought out by the Department of Public Enterprises,Ministry of Heavy Industries, Government of India on the performance of Central Public Sector Enterprises (CPSEs) was placed in both the Houses of Parliament on 21 March 2017. There were 331 CPSEs in 2017–18, out of which 257 were in operation. The remaining 74 of the CPSEs were being established.[1]
Following the theories ofEconomic Liberalism andInfrastructure-based development as referenced in theUnion Budget of India, the total expenditure of theGovernment of India increased from ₹1,13,422 crore in 1991–92[2] to ₹ 21,46,735 Crore in 2017–18.[3] To help raise the necessary capital for these expenditures and also to minimise the nation'sfiscal deficit, theGovernment of India startedprivatisation of allgovernment establishments which includesPublic sector undertakings. Conceding to the demands ofprivatisation, theGovernment of India slowly began the privatisation ofgovernment establishments such as PSU's despite stiff resistance from labour unions. The below table provides data regarding the disinvestment process which began in 1991 (barring two small units beingCMC Limited and Patherele Concrete).
Major disinvestment steps were taken in the past by theBJP-ledNDA government between 1999 and 2004.BJPprivatised thecentral government establishments such ascentral public sector units which includedBharat Aluminium Company (BALCO),Hindustan Zinc[4] (both to Sterlite Industries),Indian Petrochemicals Corporation Limited[5] (to Reliance Industries) andVSNL[6] (to the Tata group) and variousstate government establishments which included manystate public sector units.
Between 2014 and 2018 theBJP-ledNDA government divested a total of ₹1,94,646 crore,[7] which included minority and majority stakes of the most profitablecentral government establishments suchONGC-HPCL deal which was worth ₹ 36,915 crore.[8] In the budgetary announcements of the financial year 2017–18, the late Finance ministerArun Jaitley announced that the government will initiateprivatisation of 24 CPSUs, includingAir India Limited which turned from a profit making entity into a loss making entity during theINC-UPA government during the year 2007–2008. This would have been the first year in which the government was on track to hit the divestment target.[9] However, this did not go through as planned since theCOVID-19 crisis threw the entire world economy into disarray.[10]
On 17 May 2020, as part of apackage the Finance ministerNirmala Sitharaman announced that the government willprivatise allgovernment establishments which also includesPublic sector enterprises in all the sectors. She also stated that in all the strategic sectors, the number of PSU's will be limited to 4. In strategic sectors with more than 4 PSU's, the government will privatise, merge or consolidate the PSU's under holding companies in order to reduce wasteful administrative costs.Nirmala Sitharaman stated that there is a need for a coherent policy where all sectors are open to private sector participation while PSU's play an important role in defined areas.[11]
Since financial year 1991–92 to 2017–18 theGovernment of India sold public assets totalling ₹3,47,439 Crore. In recent years, certainpublic sector undertakings performed reasonably well and paid significant dividends to the government,[12] whereas other PSU's such asAir India,BSNL, andMTNL made huge losses, costing the taxpayer massive amounts of money.[13] Net Profit of all 257 operating CPSEs during 2016–17 stood at ₹ 1,27,602 crore compared to ₹ 1,14,239 crore during 2015–16 showing growth of 11.70%,[14] while Loss of loss incurring CPSEs minimized to ₹ 25,045 crore in 2016–17 compared to ₹ 30,759 crore in 2015–16 showing a decrease in loss by 18.58%.[15]
| Year . | Total Receipts (Rs. Crore) | Inflation Adjusted Total receipts (In 2019 Rupees)[16] |
|---|---|---|
| 1991–92 | 3,037 | 18,743 |
| 1992–93 | 1,912 | 10,926 |
| 1993–94 | 0 | 0 |
| 1994–95 | 4,843 | 23,271 |
| 1995–96 | 168 | 735 |
| 1996–97 | 379 | 1504 |
| 1997–98 | 910 | 3,397 |
| 1998–99 | 5,371 | 17,386 |
| 1999–00 | 1,860 | 5,993 |
| 2000–01 | 1,871 | 5,825 |
| 2001–02 | 5,657 | 16,750 |
| 2002–03 | 3,347 | 9,634 |
| 2003–04 | 15,547 | 43,006 |
| 2004–05 | 2,764 | 7,367 |
| 2005–06 | 1,569 | 3,961 |
| 2006–07 | 0 | 0 |
| 2007–08 | 4,181 | 9,392 |
| 2008–09 | 0 | 0 |
| 2009–10 | 23,552 | 41,948 |
| 2010–11 | 22,144 | 36,029 |
| 2011–12 | 13,894 | 21,229 |
| 2012–13 | 23,956 | 32,925 |
| 2013–14 | 15,819 | 19,987 |
| 2014–15 | 24,348 | 28,967 |
| 2015–16 | 23,996 | 26,851 |
| 2016–17 | 46,247 | 50,620 |
| 2017–18 | 1,00,056 | 1,05,303 |
| 2018–19 | 84,972 | 84,972 |
| 2019–20 | 50,299[17] | 45,804.9 |
| 2020–21 | 32,845[18] | 29,619 |
| 2021–22 | 13,531 | 12,220 |
| 2022–23 | 35,293 | 30,099 |
| 2023–24 | 16,507 | 13,337 |
| 2024–25 | 10,163[19] |
Total Sum Till 2017–18 ₹ 3,47,439[7]
