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Should the new government go in for disinvestment of public sector enterprise?

Created by : Esha Johar, Risk Analyst, Irevna  | 05 26 2009 08:39:55 +0000
Industry : Equity Research/AnalyticsFunctional Area : India(Markets)
Keywords : government public sector disinvestment
Activity:  1860 views;  last activity : 07 06 2010 20:18:09 +0000

Disinvestment, if not outright privatisation, is back on the agenda — it figures in the Congress’ election manifesto, and the Left parties are no longer in the ruling formation to oppose the move. This spells good news for the stock markets and government finances.
With disinvestment set to come out of the deep freeze after five years, officials in the finance and administrative ministries for various public sector enterprises have already started working on a roadmap.

Do you think so the new government go in for disinvestment of public sector enterprise?

  
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I think Govt should go for Disinvestment policy of public sector enterprises because once the policy decisions are made regarding the listing , we will be able to get companies listed with in six months. If those approvals lapse then it will set listing of the companies back by another six months and the improved stock market conditions could give some of the companies more confidence and create a positive backdrop to the idea of getting listed

Moreover the market makers are also expecting the divestment in blue chip PSUs to shore up the primary markets.
By Esha Johar, Risk Analyst, Irevna  05 26 2009 08:41:58 +0000
 
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I think Govt should not go divestment for their political benefit. The thought of divestment surgerd in their mind when they saw the fiscal deficit. But instead they should look into the main villain of fiscal deficit. For their political benefit this year as the election year due they gave the populist budget, and tried to woo the largest population of our country "The Farmers" where by they waived off 72000 crores unpaid loans of the farmers. And now the railways is going to distribute 20 rs monthly pass for 100 kms distance. These are some instances of in creasing the pressure on fiscal deficit. And now the govt is trying to cover thier deficit through the disinvestment of the profitable PSU's to private companies where by loosing their control slowly on these entities.

And even after raising the money through divestment what is the surety that the money raised would be used in decreasing the fiscal deficit and not increasing the wealth of these bereaucats

 
By Darshil , CEO/MD/Director, Darshil Cotton Company  05 27 2009 08:06:35 +0000
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Dear Darshil,

I accept your point that the government in the process of being popular did a blunder/ mistake/ calculated step by giving the "Mother of any Schemes" by giving this farm loan waiver.

Now they do not have any other options then to divest the PSU and fill the gap of Fiscal. If they do not divest then they will come up with various new taxes, which will be a burden on us only...
By Japan Shah, H.O.D, Oxford School of Management  | 05 28 2009 05:33:48 +0000
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I agree to point that govt.should go for disinvestment, Because looking at current fiscal dificit of government if they wanted to cover up that, they need to put extra burden on Invidiual which is already very high. So to reduce deficit and generate further cash flow government should go for disinvestment.
By Abhay Dodiya, B.Com. M.B.A.(Fin.)  | 05 28 2009 05:16:34 +0000
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Yes, i think that the government should go ahead with the Disinvestment of PSU's. That would help the government with enough cash also will boost up the confidence in the primary markets. 

 
By Japan Shah, H.O.D, Oxford School of Management  | 05 26 2009 16:45:24 +0000
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Dear Japan,

                 Even if I agree with your argument that to fill up the gap of deficit the government only have to option of Divesting the PSU's or else it would be a burden on  the tax paying people but ionstead of disinvesting the Profitable PSU's the government should Divest the loss making PSU's so that two purpose can be solved out ( "Ek Teer DO Nishaan" ) one of raising money for the fulfilling the deifcit and the other is with the private management in place the PSU's can make their operations profitable as the money fo private players are involved in the PSU's
By Darshil , CEO/MD/Director, Darshil Cotton Company  | 05 28 2009 08:27:51 +0000
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Govt shud not go for disinvestment becausePSU companies are already  safe as they are with government. If we analyse, serious fraud and corruption are very high in private firms. PSUs are though slow they are very powerful in terms of knowledge and they are certainly better than their counterparts in Private sector. They are safe in government hands and there should not be disinvestment.And moreover the public sector & government interference helped us to defend the economic recession in a way. So.need to keep the same,


By Jyoti Rath, Sr. Associate, Barclays  | 05 27 2009 08:45:40 +0000
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