An Enquiry into the Liaison between Disinvestment Receipts and Operating Profit of CPSEs in India

Abstract

Disinvestment of Government’s equity is a method in which equity capital owned by the Govt. is withdrawn either in fraction or in whole. From the pecuniary year 1991-92, the Govt. of India started the process of disinvestment in CPSEs. The basic law behind divestment is to augment wealth, encourage broader civic participation and to achieve enhanced market responsibility. The essential goal of disinvestment is to make sure best use of nationwide capital and to expand prolific effectiveness of the enterprises. A Public Sector Enterprise (PSE) refers to an enterprise that is owned and proscribed by the Government. In this type of enterprise, investment is made wholly or partially by the Govt. The basic goal of a public enterprise is to deliver commodities and services to the society at a reasonable price, apart from earning profit. In this backdrop, the current study is an effort to enquire the liaison between and aggregate disinvestment receipts and aggregate operating profit of the CPSEs in India during the study episode 2010-11 to 2019-20. Both positive and negative liaisons are observed between aggregate disinvestment receipts and aggregate operating profit of the CPSEs in India during the study episode, although the outcome is found to be noteworthy for the entire study episode. In finale, it may be concluded that the process of disinvestment considerably helps the Indian CPSEs to augment their operating profit during the entire period under study.