There needs to be a different approach to the issue of disinvestment process

The central government should review its stance on disinvestment. Over the years it was used as a measure to reduce the fiscal deficit. However, the government often failed to achieve the targets set out in the budget. Even during the current financial year, the government has so far not been able to collect even half of the target amount. However, the government is confident that it will be able to meet its fiscal deficit target of 6.4 percent of GDP as it is well positioned on the tax revenue front.

Expected marginal growth due to higher inflation will help control the deficit due to higher spending on the other hand. This is a good time to focus on the disinvestment process as budget pressures are relatively low this year.

Reliance on disinvestment has to be removed to limit the fiscal deficit. The government should use the disinvestment program to achieve broader goals for example there is no reason for the government to retain its investment in so many companies and that too when many of them are making losses. The government has done a good job in this direction by framing the Public Sector Enterprise Policy. The policy states that government companies will have a very limited presence in policy sectors.

Since the government has good intentions to exit other sectors, it should adopt a more systematic approach. Trying to disinvest in companies after setting targets for the year will not help. Instead the government should have a list of such companies.

With global economic prospects stable, India's growth is likely to depend largely on government spending. However, disinvestment could help keep capital expenditure at a level as the government aims to bring down the fiscal deficit in the coming years. Broadly speaking, it is clear that the disinvestment program in its current form is not yielding the desired results and a different approach is needed.