Government will have to understand that
diluting government control on PSUs by stake sales or getting them to divulge their profits as bonus is not the way to fund fiscal deficit.
With another fiscal
year coming to an end in three months, the government is staggering hard to
achieve its divestment target in public sector undertakings. Divestment in PSUs
is important for maintaining the budgeted level of fiscal deficit but given the
unfavorable market conditions at present and general elections looming in, a
successful divestment program is highly unlikely. That government has 5,000
crore in its kitty with 40,000 crore to garner before the end of FY 14, is of
ample proof how serious it has been to achieve this target.
Ideally the purpose
behind divestment is to scale up the efficiency of firms by privatization. As
per Anshuman Tiwari, the economic analyst and financial editor of Dainik
Jagaran, “There is history of debates in India on purpose of PSU divestment.
Divestment is the process to infuse efficiency in PSUs via reduction in
government control and making them widely held but lately governments have been
employing it to raise funds when they fall short of revenues to meet its fiscal
deficit target.”