Budget FAQs: What is divestment and divestment target?

The government puts up a set of shares of the Central Public Sector Enterprises (CPSEs) for sale, open for buyers to trade-in. This is done “to promote people’s ownership through public participation and improving efficiencies of CPSEs through accountability to its shareholders and to bring in operational efficiencies in CPSEs through strategic investment, ensuring their greater contribution to the economy”.

The current disinvestment policy covers public ownership of CPSEs, disinvestment through minority stake sale — the government retaining majority shareholding, i.e. at least 51 per cent of the shareholding and management control — and strategic disinvestment — sale of a substantial portion of the government shareholding of a CPSE of up to 50 per cent, or a higher percentage along with transfer of management control which essentially means handing it over to the private players in the fray.