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‘Government has no business being in business’. Examine in light of the India’s approach to disinvestment since liberalisation. Analyse whether there is a need to relook at the policy of disinvestment?

Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

2. ‘Government has no business being in business’. Examine in light of the India’s approach to disinvestment since liberalisation. Analyse whether there is a need to relook at the policy of disinvestment? (250 words)

The Hindu

The Hindu Business Line

Why this question:

Last month, the Cabinet approved sale of the government’s stake in Bharat Petroleum Corporation Limited, a navratna public sector company with oil refining and marketing operations. BPCL’s stake alone is expected to raise about ₹60,000 crore for the exchequer this year, and given the fiscal pressures the government is facing on the tax revenue front, such large-scale disinvestment will help.

Key demand of the question

One needs to examine the India’s path of disinvestment since liberalisation, discuss the macro features of the policy of disinvestment and analyse whether there is a need to have a relook at it.

Directive word

Examine – When asked to ‘Examine’, we have to look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.

Analyse – When asked to analyse, you have to examine methodically the structure or nature of the topic by separating it into component parts and present them as a whole in a summary.

Structure of the answer

Introduction:

In a few introductory lines brief define the disinvestment. Give the context of recent sale of stakes in BPCL.

Body:

       The question must discuss the following points:

  • Present the evolution of disinvestment in India.
  • Discuss how the disinvestment has fared and loopholes/challenges for disinvestment.
  • Mention the cases of air India sale, and the hesitant approach in case of IDBI etc. shows the reticence of government towards disinvestment.
  • Examine whether disinvestment has yielded results. Whether private management can take PSUs to bigger scales.

Also discuss why there is a need to remain cautious with respect to disinvestment and measures to attain the same.

Conclusion:

Give a balanced way forward.

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