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What is disinvestment, why does the Government resort to it, what are the likely effects of the approved sale of a 60.72% stake in IDBI Bank, and what should be the way forward?
1. What is disinvestment? • Disinvestment means the Government reduces its ownership in a public sector enterprise by selling part or all of its equity. • Where a substantial stake is sold along with transfer of management control to a private buyer, it is generally termed strategic disinvestment. • The aim is not merely to raise money, but also to improve efficiency, bring in capital, technology and professional management, and reduce the need for future government support.
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Understand strategic disinvestment through the IDBI Bank sale: 60.72% stake to Fairfax, rationale, impact on LIC and Government, RBI role, and the way forward.
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