Privatisation as Divestment

Divestment is the process of selling or transferring ownership of a government-owned or controlled corporation or asset to the private sector. This process is also known as privatisation, and it has become a common practice in many countries around the world.

Divestment can take several forms, including selling shares of stock to the public, selling the entire entity to a private company, or leasing the asset to a private company for a fixed period. The goal of divestment is to reduce the role of the government in the economy, increase efficiency and competitiveness, and generate revenue for the government.

Examples of Divestment

Many countries have implemented divestment programs to privatise state-owned enterprises in various sectors, including:

- Telecommunications: The UK government privatised British Telecom in 1984, and many other countries have followed suit by divesting their state-owned telecom companies.

- Banking: In the 1990s, several European countries privatised their state-owned banks, including France, Spain, and Italy.

- Energy: Many countries have privatised their state-owned energy companies, including Russia, India, and Argentina.

- Transportation: The UK government privatised British Airways in 1987, and many other countries have divested their state-owned airlines and railways.

Benefits of Divestment

Divestment can have several benefits, including:

- Increased efficiency and competitiveness: Private companies are often more efficient and innovative than government-owned enterprises.

- Reduced government debt: Divestment generates revenue for the government, which can be used to reduce public debt.

- Improved service quality: Private companies often have a greater incentive to provide high-quality services to customers.

- Increased investment: Privatisation can attract new investors to the economy, which can lead to increased economic growth.

Conclusion

In conclusion, divestment is the process of selling or transferring ownership of a government-owned or controlled corporation or asset to the private sector. This process is also known as privatisation, and it has become a common practice in many countries around the world. Divestment can have several benefits, including increased efficiency and competitiveness, reduced government debt, improved service quality, and increased investment.

Disinvestment refers to selling a part or whole of Shares of Public Sector undertakings to Private sector . This process comes under privatisation.

Like this year Govt is selling some part of equities of LIC and some Public sector banks to Private sectors , this is called disinvestment that comes under privatisation