The disinvestment of Government equity in Central Public Sector Enterprises (CPSEs) began in 1991-1992. Till 1999-2000, it was primarily through sale of minority shares in small lots. From 1999-2000 till 2003-04, the emphasis of disinvestment changed in favour of Strategic Sale viz. sale of a large block of shares along with transfer of management control to a Strategic Partner identified through a process of competitive bidding. After 2004-2005, disinvestment realisations have been through sale of small portions of equity. The total proceeds from disinvestment between 1991-1992 and 2005-2006 amounted to Rs 49,241.29 crore, consisting of the following:
| Amount Realised (Rs. Crore) | Per cent | |||
| Sale of minority shares | 37576.87 | 76 | ||
| Sale of majority shares to CPSEs | 1317.23 | 3 | ||
| Strategic Sale | 10347.19 | 21 | ||
| Total | 49241.29 | 100 | ||
Policy Framework: The National Common Minimum Programme (NCMP) adopted by the Government outlines the policy of the Government with respect to the public sector including disinvestment of Government equity in CPSEs.
The salient features of NCMP in this regard are as follows:-
The Government is committed to a strong and effective public sector whose social objectives are met by its commercial functioning. But for this, there is need for selectivity and a strategic focus. The Government is pledged to devolve full managerial and commercial autonomy to successful, profit making companies operating in a competitive environment. Generally profit-making companies will not be privatised.
- All privatisations will be considered on a transparent and consultative case-by-case basis. The Government will retain existing "navratna" companies in the public sector while these companies can raise resources from the capital market. While every effort will be made to modernise and restructure sick public sector companies and revive sick industry, chronically loss-making companies will either be sold-off, or closed, after all workers have got their legitimate dues and compensation. The Government will induct private industry to turn around companies that have potential for revival."
- The Government believes that privatisation should increase competition, not decrease it. It will not support the emergence of any monopoly that only restricts competition. It also believes that there must be a direct link between privatisation and social needs - like, for example, the use of privatisation revenues for designated social sector schemes. Public sector companies and nationalised banks will be encouraged to enter the capital market to raise resources and offer new investment avenues to retail investors.
