An integral part of the economic reforms introduced in the early 1990s was the reform plan presented for the public sector. A lot of the malfunctioning working features of the PSEs (Public Sector Enterprises) were readied to be fixed through reforms. Strategic sale of PSEs, giving more liberty to the administration of PSEs, and disinvestment, etc. were the first reform actions. Yet of all these, divestment was the commonly embraced instrument of the PSE plan. Disinvestment was embarked on for PSEs aiming at mobilizing money and inducting private business-oriented company techniques in their management. Disinvestment targets were established under each budget.
Necessarily, disinvestment implies the selling of possessions. When it comes to PUSs, disinvestment suggests the Federal government selling/ weakening its share in Public Sector Undertakings in which it has a bulk holding. Disinvestment is accomplished as a financial exercise, under which the federal government introduces yearly targets for divestment for chosen PSUs. The policy of disinvestment has developed considering after the early 1990s as well as currently, the government has actually brought some changes consisting of reviving calculated divestment (previously estimated sale).
The Union Cabinet overseen by Prime Minister Narendra Modi at its meeting on fifth October 2019 authorised the new plan under which the Department of Financial Investments as well as Public Asset Management (DIPAM) under the Ministry of Financing has been made the nodal division for the critical risk sale. This was finished with a sight to simplifying and quickening the procedure, lowering the role of administrative ministries, which often used to position obstacles in the course of significant stake sales.