About Disinvestment or privatization of Public Sector Units (PSU):

• The state of our PSUs is vital if we want schemes such as Make in India to succeed. Besides, this will hopefully clarify the role of the government versus the market on the one hand and government ownership versus regulation on the other.
• Over the years, the policy of disinvestment has increasingly become a tool to raise resources to cover the fiscal deficit with little focus on market discipline or strategic objective.
• Disinvestment is an important aspect of improving the structure of incentives and accountability of PSUs in India. It is the approach towards disinvestment that defines the incentive for any PSU to run efficiently.
• Disinvestment also assumes significance due to the prevalence of an increasingly competitive environment which makes it difficult for many PSUs to operate profitably. This leads to the rapid erosion of the value of the public assets making it critical to disinvest early.
• Financial return cannot be the sole reason for investment in PSUs. They have to serve social/strategic purposes.
• It is essential that disinvestment is not seen as an option to cover for short-term fiscal gains; instead, it should be part of a strategic plan to improve the production of goods and services in India.