Question

limitations of disinvestment​

Answer 1

$\bf\large\underline\pink{Answer:-}$

Limitations of disinvestment in India

Many people argue that total disinvestment of PSUs would naturally concentrate economic and political power in the hands of the private corporate sector. This may lead to a greater loss of the Indian citizens.

Answer 2

In Economics,the term disinvestment basically refers to the privatization or decentralization of the public owned companies and enterprises.Mainly,disinvestment is intended to improve the public sector companies internally and generate new employment opportunities.

Explanation:

Main limitations or demerits of disinvestment in India:-

• The disinvestment has miserably failed to generate enough funds which was its initial objectives,and the methods used for fund raising has also been concealed.
• An argument in favor of disinvestment of social sector was that the productive and human resources are insufficient.However,in reality the social sector has enough labor force and sufficient human resource backup.
• Disinvestment has not bee beneficial in attracting private and autonomous investors negating the earlier expectations.Many investors have not shown much interest to the sale of public shares and stocks.
• Disinvestment has a clear negative and undesirable impact on consumers as it leads to creation monopolies and higher concentration of market power.
• Less government regulations and absolute decentralization means providing full leverage to the companies in engaging profit maximizing behaviors which again is harmful for consumers and supply chain agents.
• Early stages of disinvestment have also witnessed some unemployment level implying that many employees were not willing to shift to the private sector or not attracted by its prospects as of then.