Disinvestment not a panacea for fiscal deficit: DIPAM Secretary Tuhin Kanta Pandey

Syllabus: GS-III

Subject: Economy

Topic: Fiscal Policy and Budgeting.

Context: The government didn’t specify a target for disinvestment receipts in the Interim Budget for 2024-25.

Key Reasons discussed:

  1. Shift in the notion that it’s primarily a tool to manage fiscal deficits. Instead, the focus is on the efficient management of public enterprises to benefit all shareholders.
  2. High disinvestment targets set in the past, but not achieved, have impacted the government’s credibility.
  3. Administrative ministries play a crucial role in the disinvestment process, but there’s a lack of urgency from them.

Institution in News (Prelims)

 DIPAM

It deals with all matters relating to management of Central Government investments in equity including disinvestment of equity in Central Public Sector Undertakings.

The three major areas of its work relate to

(1)   Strategic Disinvestment and Privatisation.

(2)   Minority Stake Sales and

(3)  Capital Restructuring.

All matters relating to the sale of Central Government equity through offer for sale or private placement or any other mode in the Central Public Sector Undertakings as well as strategic disinvestment of Central Public Sector Enterprises (CPSEs) is dealt with in DIPAM.

DIPAM is a Department under the Ministry of Finance.

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