{"id":90564,"date":"2026-03-01T10:38:28","date_gmt":"2026-03-01T05:08:28","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=90564"},"modified":"2026-03-02T11:30:14","modified_gmt":"2026-03-02T06:00:14","slug":"disinvestment-policy-shift-from-disinvestment-to-asset-monetisation","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/disinvestment-policy-shift-from-disinvestment-to-asset-monetisation\/","title":{"rendered":"Disinvestment Policy &#8211; Shift from Disinvestment to Asset Monetisation"},"content":{"rendered":"<h2 style=\"text-align: justify;\"><b>Disinvestment Policy Latest News<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Since the announcement of the revamped Disinvestment Policy (2020) and the Public Sector Enterprises (PSE) Policy (2021), the Union Government initially emphasized privatisation and strategic disinvestment.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, recent policy developments \u2014 including the launch of the National Monetisation Pipeline (<\/span><b>NMP<\/b><span style=\"font-weight: 400;\">) <\/span><b>2.0 <\/b><span style=\"font-weight: 400;\">\u2014 indicate a clear shift from asset sales to value extraction and asset monetisation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The focus is on dividends and leasing of assets instead of outright privatisation.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Evolution of Disinvestment Policy<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Original privatisation push (2020\u201321): <\/b><span style=\"font-weight: 400;\">The Public Sector Enterprises Policy (2021) provides a framework for &#8211;<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Government to exit non-strategic sectors.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Minimum presence in strategic sectors.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Strategic disinvestment encouraged where private sector capacity exists.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Policy rationale:<\/b><span style=\"font-weight: 400;\"> Government should minimise direct business operations. The private sector is seen as more efficient in managing enterprises.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Declining Disinvestment Revenues<\/b><\/h2>\n<ul>\n<li><b>Temporary surge: <\/b><span style=\"font-weight: 400;\">2022\u201323 disinvestment revenue (\u20b935,294 crore), with stake sales in ONGC, LIC, GAIL, and IRCTC, ended a four-year declining trend.<\/span><\/li>\n<li><b>Subsequent decline: <\/b><span style=\"font-weight: 400;\">Disinvestment proceeds fell sharply. For example, from a disinvestment revenue of \u20b916,507 crore in 2023-24 to \u20b910,163 crore (2024-25) and \u20b915,562 crore (till date in 2025\u201326).<\/span><\/li>\n<li aria-level=\"1\"><b>Policy signals:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Key changes indicate reduced emphasis on privatisation.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Removal of separate disinvestment category in Budget documents.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Disinvestment receipts merged into \u201cMiscellaneous Capital Receipts.\u201d<\/span><\/li>\n<li><span style=\"font-weight: 400;\">No annual disinvestment targets.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Reasons for Reduced Privatisation<\/b><\/h2>\n<ul>\n<li><b>Limited private sector interest:\u00a0<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Key constraints include large employee headcounts, loss-making assets, structural inefficiencies, and political and labour resistance.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">These factors made many Public Sector Enterprises <\/span><b>unattractive <\/b><span style=\"font-weight: 400;\">to private investors.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Increasing focus on dividend income:<\/b>\n<ul>\n<li><b>Consistent Dividend Policy (2020)<\/b><span style=\"font-weight: 400;\">: The Department of Investment and Public Asset Management (DIPAM) advised CPSEs to pay higher dividends, use cash reserves efficiently, and balance capex needs and profitability.<\/span><\/li>\n<li><b>Capital Restructuring Guidelines (2024): <\/b><span style=\"font-weight: 400;\">Revised guidelines emphasized value creation in CPSEs, maximising returns for the government.<\/span><\/li>\n<li aria-level=\"2\"><b>Rising dividend receipts: <\/b><span style=\"font-weight: 400;\">From \u20b939,750 crore in 2020\u201321 to \u20b974,128 crore (2024-25) and \u20b959,730 crore (so far in 2025-26). Dividend income now significantly exceeds disinvestment proceeds.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Asset Monetisation as the New Strategy<\/b><\/h2>\n<ul>\n<li><b>National Monetisation Pipeline (NMP)<\/b><span style=\"font-weight: 400;\">:\u00a0<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">Launched in 2021 to monetise brownfield infrastructure assets through leasing arrangements. Key features include &#8211;<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">No transfer of ownership<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Private sector participation<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Revenue generation from idle or underutilised assets<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Performance: <\/b><span style=\"font-weight: 400;\">About 90% of the target [\u20b96 lakh crore (2021\u201325)] achieved.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>National Monetisation Pipeline 2.0 (2025\u201330):<\/b>\n<ul>\n<li><b>Target<\/b><span style=\"font-weight: 400;\">: \u20b916.72 lakh crore<\/span><\/li>\n<li><b>Focus sectors<\/b><span style=\"font-weight: 400;\">: Transport infrastructure, energy assets, telecom, warehousing, etc.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">This represents a major expansion of the asset monetisation approach.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Advantages of the New Approach<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Fiscal benefits<\/b><span style=\"font-weight: 400;\">: Stable and predictable revenue through dividends. Reduced political resistance compared to privatisation. Avoids one-time asset sales.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Economic benefits: <\/b><span style=\"font-weight: 400;\">Improves utilisation of public assets, encourages private sector efficiency, and retains public ownership.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Administrative benefits: <\/b><span style=\"font-weight: 400;\">Lower complexity compared to strategic disinvestment, and faster implementation.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Challenges and Way Forward<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Fiscal risks: <\/b><span style=\"font-weight: 400;\">Dividend extraction may reduce reinvestment capacity of CPSEs. Overdependence on dividends can weaken long-term growth.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Strengthen corporate governance<\/b><span style=\"font-weight: 400;\">: Professional management of CPSEs, reduced political interference.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Selective privatisation: <\/b><span style=\"font-weight: 400;\">Focus on loss-making non-strategic sectors.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Structural issues: <\/b><span style=\"font-weight: 400;\">Persistent inefficiencies in CPSE management. Asset monetisation does not address operational problems.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Balanced public sector reform: <\/b><span style=\"font-weight: 400;\">Combine strategic disinvestment with monetisation\u00a0 and governance reforms.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Market risks: <\/b><span style=\"font-weight: 400;\">Private sector interest depends on economic conditions. Monetisation revenues may fluctuate.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Efficient asset monetisation: <\/b><span style=\"font-weight: 400;\">Transparent bidding processes, and strong regulatory oversight.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Policy inconsistency: <\/b><span style=\"font-weight: 400;\">Shift from privatisation to monetisation may create uncertainty among investors.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Sustainable dividend policy<\/b><span style=\"font-weight: 400;\">: Avoid excessive dividend extraction, and ensure adequate capital expenditure.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>Conclusion<\/b><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India\u2019s public sector reform strategy is undergoing a significant transition from privatisation to asset monetisation and dividend extraction.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">While this approach provides steady fiscal returns and political acceptability, long-term success will depend on balancing revenue generation with the financial health and competitiveness of CPSEs.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A <\/span><b>calibrated mix<\/b><span style=\"font-weight: 400;\"> of privatisation, monetisation, and governance reforms remains essential for sustainable public sector management.<\/span><\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><b>Source: <\/b><strong><a href=\"https:\/\/www.thehindu.com\/business\/centres-revenue-focus-has-shifted-from-selling-psus-to-earning-more-from-them-data-shows\/article70687766.ece\" target=\"_blank\" rel=\"nofollow noopener\">TH<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recent policy developments &#8211; including NMP 2.0 &#8211; indicate a clear shift in India\u2019s disinvestment policy from asset sales to value extraction and asset monetisation.<\/p>\n","protected":false},"author":19,"featured_media":90670,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[5817,60,22,59],"class_list":{"0":"post-90564","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-disinvestment-policy","9":"tag-mains-articles","10":"tag-upsc-current-affairs","11":"tag-upsc-mains-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/90564","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=90564"}],"version-history":[{"count":5,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/90564\/revisions"}],"predecessor-version":[{"id":90686,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/90564\/revisions\/90686"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/90670"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=90564"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=90564"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=90564"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}