Objectives & Achievements of the Policy of Disinvestment in India

Plan for disinvestment has been started by the New Industrial Policy of 1991. The Government has Public Sector Undertakings (PSUs) in which massive investment is that of the govt. i.e. public finance. The disinvestment will release this capital. To release governments capital from PSUs and to divert them into social sectors which can raise standard of living of living are the objectives of the disinvestment policy. To increase private sector participation and to create a competitive market by withdrawing govt. monopoly and regulation by disinvestment.

Maximum distribution of wealth by shares distribution to wide base of public. To reduce the government’s expenditure is the most important among all. Some benefits that have been achieved are that govt. could raise 20000 crores of rupees by disinvestment of about 50 PSUs and this amount can be directed towards social sector for raising basic facilities like education, health etc., due to implementation of this disinvestment policy. Due to competition salaries of employees has been increased, quality is being improved and the govt. expenditures is reduced to a portion.

Objectives of Essential Commodities Act 1955

The Union Government has approved the removal of the requirement of licensing of dealers and restriction on storage and movement of wheat, rice, paddy, sugar, edible oil etc. placed under the Essential Commodities Act (ECA). The objective of freeing up markets in involved in the decision of the government. This could also be the beginning of a unified Pan-India market for agriculture produce, it most likely to happen.

The ECA was amended and the step known as ‘New Grain Policy’ to liberalise the regulations with objectives of:
• opening the market to make it operative.
• to make production reach to scarce areas.
• to increase investment of private sectors.
• to increase exports of production of foreign markets.
• to protect the interest of farmers by increasing chances of earning higher profits.

Such freedom for private trade in foodgrain is a prerequisite for the government’s proposed move to limit official procurement to the buffer stocking norm.

Essential Commodities Act is an act of Parliament of India which was established to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or blackmarketing would affect the normal life of the people. This includes foodstuff, drugs, fuel (petroleum products) etc.

Explore more:

• Disinvestment
• Disinvestment Policy By Ministry of Finance, Department of Disinvestment
• Objectives and Importance of Disinvestment
• Essential Services Maintenance Act
• Report: Essential Commodity Act 1955

« Go Back to Model Answer Page