Disinvestment in India

Meaning

Disinvestment refers to the government selling its shares in public sector enterprises (PSEs) to raise funds. This process reduces the government’s stake in these companies, aiming to improve efficiency, reduce fiscal deficits, or generate revenue.

Weaknesses of Disinvestment in India

• Loss of Control: The government loses control over strategic assets, impacting national interest.
• Job Security Concerns: Privatization often leads to job cuts, affecting employee morale.
• Short-Term Revenue Focus: Disinvestment may focus on immediate revenue rather than long-term benefits.
• Lack of Transparency: In some cases, the process lacks clarity, raising questions about fair valuations.

These weaknesses highlight the challenges India faces in balancing fiscal goals with economic stability.