Union Budget 2023: What is disinvestment and why it is done ?

Union Budget 2023: The government raises money for meeting specific needs, such as to bridge the revenue shortfall from other regular sources.

Union Budget 2023: The government does disinvestment to reduce the fiscal burden. (Representative image from Reuters)

Union Budget 2023: Disinvestment is the sales or liquidation of assets by the government. Usually, central and state public sector enterprises, projects, or other fixed assets are used for disinvestment. As these assets are sold to private investors, disinvestment results in privatization.

The government does disinvestment to reduce the fiscal burden. The government raises money for meeting specific needs, such as to bridge the revenue shortfall from other regular sources.

The contribution of disinvestment becomes important when the government needs funds to spend on infrastructure projects to accelerate the development of the country.

The Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance deals with matters related to the management of government investments in equity including disinvestment of equity in public sector undertakings.