Disinvestment and Privatization of Public Sector Enterprises (PSEs) in India

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This book traces the philosophy and evolution of PSEs in the early years of post-Independent India. It records the causes of disillusionment with public sector and the consequent reversal of government policy, beginning 1991. Disinvestment and privatization policy of the present government is also set forth. Policy of the present government regarding public sector was well articulated by Finance Minister Nirmala Sitharaman in her Budget Speech to the Parliament on February 1, 2021. It has the following objectives: (a) minimizing presence of Central Public Sector Enterprises (CPSEs) including financial institutions and creating new investment space for private sector, (b) post-disinvestment, economic growth of CPSEs/financial institutions will be through infusion of private capital, technology, and best management practices, to contribute to economic growth and new jobs, and (c) disinvestment proceeds to be used to finance various social sector and developmental programmes of the government. Dr. Madhusudana H.S. is presently Associate Professor and Head, Department of Economics, Government First Grade College, Mulbagal, Kolar District, Karnataka. He obtained his M.A. (Economics) and M.Phil. degrees from Bangalore University, Bangalore in 1993 and 1996 respectively. He received his Ph.D. degree from Sri Krishnadevaraya University, Ananthapuramu, Andhra Pradesh in 2005. He has participated and presented research papers at various national and international conferences. He has visited University of Malaysia and University of Singapore as a resource person. 1. Constitutional and Legal Provisions for Industrialisation 1.1 Constitutional Provisions for Industrialization 1.2 Industrial (Development and Regulation) Act, 1951 1.3 Companies Act, 2013 1.4 Securities and Exchange Board of India (SEBI) Act, 1992 1.5 Securities Contracts (Regulation) Act, (SCRA) 1956 1.6 Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 1.7 Competition Act, 2002 1.8 Consumer Protection Act, 1986 1.9 Foreign Exchange Management Act (FEMA), 1999 2. Five Year Plans and Industrial Policy 2.1 Establishment of the Planning Commission 2.2 Establishment of National Development Council (NDC) 2.3 First Five Year Plan: 1951-52 to 1955-56 2.4 Second Five Year Plan: 1956-57 to 1960-61 2.5 Third Five Year Plan: 1961-62 to 1965-66 2.6 Annual Plans 2.7 Fourth Five Year Plan: 1969-70 to 1973-74 2.8 Fifth Five Year Plan: 1974-75 to 1978-79 2.9 Sixth Five Year Plan: 1980-81 to 1984-85 2.10 Seventh Five Year Plan: 1985-86 to 1989-90 2.11 Eighth Five Year Plan: 1992-93 to 1996-97 2.12 Ninth Five Year Plan: 1997-98 to 2001-02 2.13 Tenth Five Year Plan: 2002-03 to 2006-07 2.14 Eleventh Five Year Plan: 2007-08 to 2011-12 2.15 Twelfth Five Year Plan: 2012-13 to 2016-17 3. Public Sector: Expansion, Objectives and Institutional Set Up 3.1 Industrial Policy Resolution, 1948 3.2 Industrial Policy Resolution, 1956 3.3 Industrial Licensing Policy Inquiry Committee (ILPIC), 1969 3.4 Industrial Policy Statements 1973, 1977 and 1980 3.5 Expansion of Public Sector 3.6 Regulation and Control of Private Sector 3.7 Absence of Internal and External Competition 3.8 Objectives of Public Sector Enterprises 3.9 Organisation of Public Sector 3.10 Categorization of CPSEs 3.11 Ministry of Heavy Industry and Public Enterprises 4. Disillusionment with Public Sector and Rethinking 4.1 Poor Performance of Public Sector 4.2 Pressure for Industrial Liberalisation 4.3 New Economic Policy and Industrial Liberalisation, 1985 4.4 Industrial Policy Statement, 1991: The Great U-turn 4.5 Liberalization of the Locational Policy 4.6 National Manufacturing Competitiveness Council (2004) 4.7 National Manufacturing Policy (NMP), 2011 5. Measures to Strengthen Public Sector Enterprises 5.1 Autonomy to CPSEs 5.2 Corporate Governance of Public Sector Enterprises 5.3 Professionalization of Boards of CPSEs 5.4 Memorandum of Understanding (MoU) System 5.5 Board for Reconstruction of Public Sector Enterprises (BRPSE) 6. Public Sector Disinvestment Policy 6.1 Department of Disinvestment 6.2 Benefits of Disinvestment 6.3 Evolution of Disinvestment Policy 6.4 Utilization of Disinvestment Proceeds: National Investment Fund (NIF) 6.5 Disinvestment Receipts 6.6 Twelfth Five Year Plan (2012-17) on Public Sector 7. Public Sector Disinvestment Commission 7.1 Establishment of the Disinvestment Commission 7.2 Classification of Industry Groups 7.3 Objectives and Strategy 7.4 Loss-making PSUs 7.5 Profit-making PSUs 7.6 Criteria for Disinvestment 7.7 Use of Disinvestment Proceeds 7.8 Re-constituted Public Sector Disinvestment Commission 8. Procedures for Disinvestment 8.1 Kinds of Disinvestment Transactions 8.2 Initial Public Offer (IPO) and Further Public Offer (FPO) 8.3 Stages of Public Offer 8.4 Actions Required for Disinvestment 8.5 Interaction with Investors 9. Summing Up and Concluding Observations 9.1 Evolution of Public Sector Policy 9.2 Disillusionment 9.3 Industrial Policy Statement, 1991 9.4 Maharatnas, Navratnas and Miniratnas 9.5 New Economic Realities and Public Sector Enterprises 9.6 Present Policy on Public Sector Appendix 1: Industrial Policy Resolution, 1956 Appendix 2: Statement on Industrial Policy (July 24, 1991) Bibliography Index The book well articulates the policy of the present government regarding the public sector, viz.: (a) minimizing presence of Central Public Sector Enterprises (CPSEs) including financial institutions and creating new investment space for private sector, (b) post-disinvestment, economic growth of CPSEs/financial institutions will be through infusion of private capital, technology and best management practices, to contribute to economic growth and new jobs, and (c) disinvestment proceeds to be used to finance various social sector and developmental programmes of the government.

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