Selling Family Gold for Pleasure Spending: The Case of Public Sector Stake-Sale in India

Abstract

India’s Finance Minister (FM), Arun Jaitley kick started the public sector disinvestment with 5 per cent stake sale in Steel Authority of India (SAIL) on 5.12.2014. 200 million shares were sold to the investors. The offer generated a lot of interest among the retail investors and was over subscribed by one-and-a-half times. It fetched Rs 1700 crore for the Government of India (GOI) to go one step closer in meeting disinvestment target for the year 2014-15. Other companies like Coal India, Oil and Natural Gas Corporation (ONGC), and National Hydro-power Corporation (NHPC) are on the agenda. The FM also targets to sale residual shares in Hindustan Zinc Ltd and Bharat Aluminum Company (BALCO) to the present majority stake-holder, Anil Agrawal. The money fetched from disinvestment would be used for keeping the fiscal deficit within 4.1 per cent of GDP. Although it is important to keep fiscal deficit in tight control, it should have been done by reducing non-plan expenditure. This paper aims to show the actual value of these units for the self-reliance of India and the meager amount for which these jewels are going to be doled out to private operators. It gives a few suggestions to protect the interest of retail investors in the stock market. The paper also tries to find research gaps how the retail investors’ interest can be protected comprehensively from stock market fluctuations in future.