Budget 2018

What is divestment?

For disinvestment, the government either sells stakes in public-sector units or lists them on the stock exchange.

BCCL
Last year, Finance Minister Arun Jaitley set a disinvestment target of Rs 72,000 crore, and the government has already crossed Rs 54,000 crore.
What has divestment got to do with the Budget?

The government has no business to be in business unless it is of critical importance. This has been proven true by the performance of most of the public-sector units (PSUs). By disinvesting its own businesses, the government can put the proceeds to better use. The idea was first floated in the 1991 Budget by then finance minister Manmohan Singh while he began liberalising and reforming the economy. For disinvestment, the government either sells stakes in public-sector units or lists them on the stock exchange. The Atal Bihari Vajpayee government is known for fast-tracking disinvestment by setting up a separate ministry of disinvestment under Arun Shourie.

Last year, Finance Minister Arun Jaitley set a disinvestment target of Rs 72,000 crore, and the government has already crossed Rs 54,000 crore. As GST collection is down, no revenue from spectrum auction and a lower dividend from RBI, disinvestment is going to be a significant source of revenue for the government.


Disinvestment will again figure prominently in Budget 2018. The government has already identified nearly three dozen firms for disinvestment. Besides stake sale in Air India and Dredging Corporation, IRCTC, IRCON, Mishra Dhatu Nigam and Mazagon Dock Ltd will be listed on the stock exchange. The bullish market is going to help the government's disinvestment agenda by bringing in more money.
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