Rationale for disinvestment

Because of the current revenue expenditure on items such as interest payments, wages and salaries of government employee and subsidiaries, the government is left with hardly any surplus for capital expenditure on social and physical infrastructure.

Whereas the government should be spending on basic education, primary health and family welfare, huge amounts of resources are blocked in several non-strategic sectors such as hotels, trading companies, consultancy companies, textile companies, chemical and pharmaceuticals companies, consumer goods companies etc.

Not just these. The continued existence of the PSEs is forcing the government to commit further resources for the sustenance of many non-viable PSEs. The government continues to expose the taxpayers’ money to risk, which it can readily avoid. To top it all, there is a huge amount of debt overhang, which needs to be serviced and reduced before money is available to invest in infrastructure. This makes disinvestment of the government stake in the PSEs absolutely imperative.