What is the budgetary disinvestment target of the Union government of India for FY20?

Correct option is D

Ans: (D) ₹1,05,000 crore

Explanation:
The budgetary disinvestment target of the Union government of India for FY20 was set at ₹1,05,000 crore. This ambitious target was part of the government's broader strategy to raise funds by selling stakes in state-owned enterprises. The disinvestment proceeds were intended to contribute towards bridging fiscal deficits and supporting key infrastructural projects.

Information Booster:

Disinvestment refers to the process of selling or liquidating an asset or a part of an asset, typically by a government or a corporation. In the context of public sector enterprises, disinvestment involves the sale or reduction of government ownership in state-owned enterprises (SOEs) or public sector companies. It can be done through various methods, such as partial sale, privatization, or offering shares to the public.

The purpose of disinvestment is generally to improve efficiency, raise funds, reduce government debt, or allow private players to take over businesses to improve performance.

Key Points about Disinvestment:

1. Types of Disinvestment:

   • Minority Disinvestment: The government sells a portion of its shares in a public sector company, retaining majority control.

   • Majority Disinvestment: The government sells a majority of its shares, thereby relinquishing control over the company.

   • Complete Disinvestment: The government sells all its shares, completely privatizing the company.

2. Objectives of Disinvestment:

   • Raising Capital: The government can use the funds generated from disinvestment for development projects, infrastructure building, or to reduce fiscal deficits.

   • Improving Efficiency: Privatization or selling stakes to private companies can bring in better management, leading to improved efficiency and productivity.

   • Reducing Fiscal Burden: By disinvesting, the government can reduce the financial burden of maintaining and managing state-owned enterprises.

   • Encouraging Market Competition: Privatization of public sector enterprises can foster competition, leading to better quality of goods and services.

3. Methods of Disinvestment:

   • Initial Public Offering (IPO): The government offers shares of the state-owned company to the public through the stock market.

   • Follow-on Public Offering (FPO): Selling additional shares to the public after the initial offering.

   • Strategic Sale: Selling a significant portion of the government’s stake to a private entity or investor.

   • Auction: The government may sell its stake to the highest bidder in an auction.

4. Examples in India:

   • The Indian government has used disinvestment as a tool for economic reform, such as in the cases of Air India, BSNL, and Coal India, among others.

   • The NITI Aayog (National Institution for Transforming India) and Department of Investment and Public Asset Management (DIPAM) are responsible for overseeing the disinvestment process in India.

5. Benefits of Disinvestment:

   • Financial Support: The funds raised can be used for infrastructure, social welfare programs, and debt reduction.

   • Private Sector Participation: The entry of private investors can introduce new technologies, management practices, and efficiency.

   • Focus on Government Priorities: The government can focus on sectors that require its attention and involvement, such as healthcare, education, and defense.