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disinvestment in india


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disinvestment policy in india

Published in: Economy & Finance
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disinvestment in india

  1. 1. Presented by N.karthikeyan II M.B.A' Disinvestment policy
  2. 2. Contents <ul><li>Introduction </li></ul><ul><li>Definition </li></ul><ul><li>Objective of disinvestment </li></ul><ul><li>Reasons for disinvestment </li></ul><ul><li>Problems of disinvestment </li></ul><ul><li>Overview of India's disinvestment </li></ul><ul><li>Conclusion </li></ul>
  3. 3. 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.
  4. 4. Definition “ The action of an organisation or government selling or liquidating an asset or subsidiary”is called disinvestment
  5. 5. Objectives of disinvestment <ul><li>To reduce the financial burden on government </li></ul><ul><li>To improve public finances </li></ul><ul><li>To introduce, competition and market discipline </li></ul><ul><li>To increase growth of the firm </li></ul><ul><li>To encourage wider share of ownership </li></ul>
  6. 6. Reasons for disinvestment <ul><li>To meet fiscal deficit </li></ul><ul><li>Expantion or diversification of the firm </li></ul><ul><li>To repayment of government debts </li></ul><ul><li>Implementation of government plan </li></ul><ul><li>PSU's give negative rate of return on capital </li></ul>
  7. 7. Problems of disinvesment Dilution of ownership Disinvestment affects labour
  8. 8. Overview of India's disinvestment <ul><li>Disinvestment policies introduce after new economic policy in july – 1991 </li></ul><ul><li>The disinvestment policy as an active tool to reduce the burden to financing the PSU </li></ul><ul><li>NIF (National investment fund)‏ </li></ul><ul><li>Government has a borrowing plan of 4,00,000cr roughly 2,45,000 cr would raised through OMO </li></ul>
  9. 9. 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
  10. 10. 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
  11. 11. <ul><li>This year generated 1120cr from disinvestment like issue of IPOs there are </li></ul><ul><li>Oil India </li></ul><ul><li>RITES </li></ul><ul><li>Cochin shipyard </li></ul><ul><li>manganese ore </li></ul><ul><li>telecommunication consultant india </li></ul><ul><li>rashtriya ispat </li></ul>
  12. 12. <ul><li>Coming IPOs are: </li></ul><ul><li>NHPC – IPO will open on Aug 7 and it will close on Aug 11 </li></ul><ul><li>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. </li></ul><ul><li>United Bank – IPO will come end of december </li></ul><ul><li>United Bank is plan to raise 400cr from its 20%stake </li></ul>
  13. 13. Proposal plan - 45000cr
  14. 14. Conclusion
  15. 15. Thank you