Public Sector and Disinvestment
Public Sector Undertakings (PSUs) are companies where the government holds 51% or more of the total share capital. After India became independent in 1947, the government created many PSUs to build heavy industries like steel, coal, and electricity. Prime Minister Nehru called them the 'Temples of Modern India.' Over time, some PSUs became very successful, while others started losing money due to old technology and poor management. This led to the need for reforms.
Concepts (3)
This is a special title given to the largest and most profitable PSUs. To become a Maharatna, a company must be a 'Navratna' first and be listed on the stock exchange. It must have a very high average annual net profit (over ₹5,000 crore).
This is a special title given to the largest and most profitable PSUs. To become a Maharatna, a company must be a 'Navratna' first and be listed on the stock exchange. It must have a very high average annual net profit (over ₹5,000 crore). This status gives the company's board the power to invest up to ₹5,000 crore in projects without needing permission from the government. Examples include ONGC, SAIL, and NTPC.
In the Union Budget, money received from selling assets like PSU shares is called a Capital Receipt. Unlike tax income, this does not happen regularly. It is 'non-debt' because the government does not have to pay this money back.
In the Union Budget, money received from selling assets like PSU shares is called a Capital Receipt. Unlike tax income, this does not happen regularly. It is 'non-debt' because the government does not have to pay this money back. It helps in reducing the fiscal deficit. In the 2016 UPSC paper, loans and asset sales were highlighted as key parts of the capital budget.
This is a process where the government sells 50% or more of its shares in a PSU. Along with the shares, the government also hands over the management control to the private buyer.
This is a process where the government sells 50% or more of its shares in a PSU. Along with the shares, the government also hands over the management control to the private buyer. This is different from a normal share sale because the buyer now runs the company. An example is the sale of Bharat Aluminium Company (BALCO) or Air India. It aims to make the company more profitable using private expertise.
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Start Lesson: Maharatna Status