Token privatisation, Microeconomics

Token Privatisation: This implies the sale of 5 per cent or 10 per cent shares of a profit-making public sector enterprise in the market with the objective of obtaining revenue to reduce budget deficit. This is also referred to as ‘deficit privatisation'. Finance Ministers in India have been undertaking such privatisation to reduce their budget deficits. This policy has also been referred to as ‘disinvestment'. It was customary for finance ministers to set targets for disinvestment during a year. It may be noted that total receipts from disinvestment were of the order of Rs. 45,035 crores in 2003-04 and the total investment in Central Government enterprises was of the order of Rs. 3,33,475 crores in 2003. Thus, total disinvestment proceeds work out to be 13.5 per cent of total investment in PSUs. The entire proceeds were used to finance budget deficits. Consequently, this kind of disinvestment was severely criticised because these were the highly profitable PSUs which were disinvested. It was compared to ‘selling the family silver to pay the grocer's bills'.


Posted Date: 11/15/2012 2:22:59 AM | Location : United States

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