Examines one of the most important reforms relating to public
enterprise (PE) policy in India, namely divestment of their
share‐holdings. Discusses the philosophy, process, organizational
mechanism, expectations and outcomes of divestment in PEs. Finally,
points out the major weaknesses retarding the success of the newly
introduced divestment policy and outlines some reformatory measures to
overcome them. As a backdrop, presents the historical background,
current scenario, and problems and performance of PEs in India, but has
been restricted to the central PEs, i.e. enterprises owned and managed
by the central government only.
Development Banks (DBs) are specialized financial institutions
created for the purpose of balanced industrialization. A development
bank has to act more as a promotional agency than a mere financial
institution. Therefore separate institutions have been set up, namely
State Industrial Development Corporations (SIDCs) in almost all the
states in India for undertaking promotional activities. With the growing
role of Development Banking in India, the SIDCs are facing financial
hardships as they are wholly dependent on Government grants. The paucity
of funds for SIDCs has prompted them to opt for divestment of their
shareholdings from the existing units to recycle the funds for
increasing industrial promotion. Divestment decisions are concerned with
the quantum and timing of divestment and the determination of share
prices for this purpose. SIDCs are different in that their divestment
decisions need not be primarily guided by economic factors (capital
appreciation). Highlights the divestment policy and share evaluation
models adopted by a development bank, namely Andhra Pradesh Industrial
Development Corporation Ltd, which is basically responsible for
transforming an agrarian Indian state (Andhra Pradesh), into a moderate
industrial organization.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.