explain various challenges to disinvestment program
Answers
Last few years United Progressive Alliance government repeatedly set ambitious targets for disinvestment proceeds from public sector enterprises and missed those targets marvelously.
Inspite of the fact that fiscal deficit is high which implies that revenue should be increased.
Depressed state of markets and paucity of reasonable buyers mean that frequently government has to prevail on its own companies such as LIC of India and state-controlled oil companies step in buying stakes in public units.
Government's dilemma is understandable.
Fact it is increasingly transparent that without a class of people for whom investment is a normal activity selling stakes in public sector is fraught with danger.
Idea behind disinvestment is that huge companies will be sold to large set of private investors and not serve to strengthen half-formed oligarchy.
Part of this reason is that governments no need to sell companies when going is good whether in terms of companies' own balance sheets or more normally the market and fear to sell them when things are bad.