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In India, - Hence, ,: Disinvestment
In India, - Hence, ,: Disinvestment
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Modalities of Disinvestment:
In order to achieve the various objectives and
goals of disinvestment many methods have been
formulated and implemented. These includes:
(1) Public Offer: offering shares of public sector
enterprises at a fixed price through a general
prospectus.
the offer is made to the general public
through the medium of recognized market
intermediaries.
(2) Cross Holding: In the case of cross holding, the
govt. would simply sell part of its share of one PSU
to one or more PSU’s.
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(3) Golden Share: in this model, the govt. retains a
26 percent share in the PSU. This 26 percent share
will continue to give the govt. the status of majority
share holder.
(4) Warehousing: Under this model, the govt. owned
financial institutions were expected to buy the
govt.’s share in select PSU’s and holding them until
third buyer emerged.
(5) Strategic Sale: Under this model, govt. sells a
major portion (51% and above) of its stake to the
strategic buyer and also gives over the
management control.
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Progress of Disinvestment:
Disinvestment has also been undertaken in
states.
Out for the 222 state level public enterprises
identified for disinvestment, the process has been
initiated in 124 enterprises.
Out of which 30 enterprises have been privatized
and 68 have been closed down.
The reason for such low proportion of
disinvestment proceeds against the target are:
(a) The unfavorable market conditions.
(b) Stringent bureaucratic procedure.
(c) The Govt. is not transparent about its approach
towards privatization of PSE’s. 11