disinvestment in india

Presented by N.karthikeyan II M.B.A' Disinvestment policy

Contents
Introduction
Definition
Objective of disinvestment
Reasons for disinvestment
Problems of disinvestment
Overview of India's disinvestment
Conclusion

Introduction Investment and disinvestment are two sides of the same coin. Investment refers to conversion of money or cash into securities, debentures, bonds or any other claims on money. At the same time, disinvestment invloves the conversion of money claims or securities into money or cash.

Definition “ The action of an organisation or government selling or liquidating an asset or subsidiary”is called disinvestment

Objectives of disinvestment
To reduce the financial burden on government
To improve public finances
To introduce, competition and market discipline
To increase growth of the firm
To encourage wider share of ownership

Reasons for disinvestment
To meet fiscal deficit
Expantion or diversification of the firm
To repayment of government debts
Implementation of government plan
PSU's give negative rate of return on capital

Problems of disinvesment Dilution of ownership Disinvestment affects labour

Overview of India's disinvestment
Disinvestment policies introduce after new economic policy in july – 1991
The disinvestment policy as an active tool to reduce the burden to financing the PSU
NIF (National investment fund)‏
Government has a borrowing plan of 4,00,000cr roughly 2,45,000 cr would raised through OMO

1991-92 31 PSU were disinvested and collected amount 3038 cr 1991-01 20506 cr were collected through disinvestment policy 1991-96 12,300 cr was generated 7300 cr was used to fiscal deficts

UPA government received 47,901cr from investment of equity in PSUs 2004-05 4424cr 2005-06 1581cr 2006-07 534cr 2007-08 38,785cr 2008-09 2,567cr UPA government is plan to generated 1120cr from disinvestment in 2009-10

This year generated 1120cr from disinvestment like issue of IPOs there are
Oil India
RITES
Cochin shipyard
manganese ore
telecommunication consultant india
rashtriya ispat

Coming IPOs are:
NHPC – IPO will open on Aug 7 and it will close on Aug 11
NHPC plans to raise 6048cr from its 15% stake (168cr share issue) 5% is goes to govt disinvestment other 10% will use for company growth.
United Bank – IPO will come end of december
United Bank is plan to raise 400cr from its 20%stake

Proposal plan - 45000cr

Conclusion

Thank you

disinvestment in india

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