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What is divestment?

For disinvestment, the government either sells stakes in public-sector units or lists them on the stock exchange.

ET Online|
Updated: Jan 07, 2020, 03.09 PM IST
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Last year, Finance Minister Arun Jaitley set a disinvestment target of Rs 72,000 crore, and the government has already crossed Rs 54,000 crore.
What has divestment got to do with the Budget?

The government has no business to be in business unless it is of critical importance. This has been proven true by the performance of most of the public-sector units (PSUs). By dis-investing its own businesses, the government can put the proceeds to better use. The idea was first floated in the 1991 Budget by then finance minister Manmohan Singh while he began liberalising and reforming the economy. For disinvestment, the government either sells stakes in public-sector units or lists them on the stock exchange. The Atal Bihari Vajpayee government is known for fast-tracking disinvestment by setting up a separate ministry of disinvestment under Arun Shourie.

Last year, Finance Minister Nirmala Sitharaman set a disinvestment target of Rs 1,05,000 crore, and the government has already achieved Rs.17,364.26 crore.

Disinvestment will again figure prominently in Budget 2020. The government has already identified nearly three dozen firms for disinvestment. The bullish market is going to help the government's disinvestment agenda by bringing in more money.

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