Disinvestment of Equity Shares

ABSTRACT The founding fathers of our republic used the public undertaking as an essential and vibrant element in the building-up of India’s economy. One of the basic objectives of starting the public undertaking in India was to build infrastructure for economic development and rapid economic growth. Since their inception, public enterprises have played an important role in achieving the objective of economic growth with social justice. However economic compulsions, viz., deteriora-tion of balance of payment position and increasing fiscal deficit led to adoption of a new approach towards the public undertaking in 1991. Disinvestment of public sector undertakings (PSUs) is one of the policy measures adopted by the government of India for providing financial discipline and improve the performance of this undertaking in tune with the new economic policy of Liberalisa-tion, Privatisation and Globalisation, Privatisation and Globalisation (LPG) through the 1991 Industrial Policy Statement. The aims of disinvestments policy are: (i) Increasing resources to meet fiscal deficit; (ii) encouraging wider public participation including that of workers; (iii) penetrating market discipline within public enterprises; and (iv) improving performance