DISINVESTMENT IN INDIA

DISINVESTMENT IN INDIA

MEANING AND DEFINITIONDisinvestment refers to the action of anorganization or the government in selling or liquidating an asset or subsidiary.

In simple words, disinvestment is the withdrawal of capital from a country or corporation.TYPES OF DISINVESTMENT1. Offer for sale to Public at fixed price2. Strategic sale3. International offering4. Asset Sale and Winding up

PROCESS OF DISINVESTMENT

Admin Ministry input through Disinvestment MinistryCore group of secretariesCore group of s CGO does monitoringCabinet Committee on DisinvestmentCCDMinistry of finance DEA does analysisDisinvestment CommissionIMG constituted for implementationList of enterprises to be considered for disinvestmentSends recommendationsGives recommendations for these enterprisesInputs from Admin Ministry input through Disinvestment Ministry Sends final recommendations toAfter approvalIMG reports to Core Group1765432METHODS ADOPTED IN INDIANet Asset Method

2. Profit Earning Capacity Value Method

3. Discounted Cash Flow Method

OBJECTIVES OF DISINVESTMENTReleasing large amount of public resources Reducing the public debt Transfer of Commercial Risk Releasing other tangible and intangible resources Expose the privatised companies to market discipline Wider distribution of wealth Effect on the Capital MarketIncrease in Economic Activity

PHASES OF DISINVESTMENT IN INDIAPHASE I (1991-92 to 1995-96)PHASE II (1996-97 to 1997-98) PHASE III (1998-99 to 2007-2008)PHASE IV (2009-10 TO 2013-14)PHASE V (Current Scenario)

OrgUnderMinistrygovt.shareholdingApproveddisinvestmentNHPCPower86%11.36%Coal India Ltdcoal90%10%ONGCpetroleum69%5%