Budget in a Minute: What is disinvestment? Anil Singhvi explains its importance for Government, Markets!

In today's 'Budget in a Minute' episode, Zee Business Managing Editor Anil Singhvi explains another important term which finds a mention in a Union Budget. That is Disinvestment and it is expected to get a mention in the Budget 2021, too. 

The Market Guru said that the job of the government is to govern the country and not run businesses. There is an old saying that “Government has no business to do business”, the Managing Editor said. So, what about the government companies, which are functioning now?

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The government companies were formed because they had a role to play at that time as there were certain businesses which no one wanted to do, Singhvi said.  

Now there is no need for the government to run many of these businesses or at least reduce its stake in these companies, the Managing Editor further said. Selling its stake in these government companies will help it get some money which can be used by it for different reasons. 

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The government always makes a loss-making budget where the expenditure is more than the revenues. This is because it must spend money on a lot of things and different government schemes.  

So where can it possibly raise money from? One of the ways to raise this money is by selling its stake in the government companies.  

The government sets its disinvestment targets in every budget for every year. 

If the government has to raise significant amount of money from the markets, it is imperative to keep the markets strong. The stake sale will happen only if the markets are going strong, Singhvi further said. 

It is therefore very important for the people to keep an eye on this number, he said. This also gives an indication as to which all companies are in line for a stake sale by the government.     

The Union Budget is one of the most important occasions for the government and even the common man and industry waits for this annual event. Market Guru has been explaining about the important terms that are mentioned in anu Budget Speech. Some of the Budget related terms explained by Singhvi were Union Budget meaning, GDP, fiscal deficit, direct and indirect tax, 80D of ITR and Economic Survey etc.