The Navratnas Policy

In order to enhance professionalism, and improve efficiency and competitiveness to enable them to effectively compete in the liberalised global environment, the Government of India introduced a policy in 1996, known as Navaratna Policy. According to this policy, the nine most profitable PSUs were stated as the“Navaratna”. Later two more PSUs were included in the list and 97 other profit-making PSUs were termed as Mini Ratnas. The companies included in Navaratnas are:- 

1. Hindustan Petroleum Corporation Ltd. (HPCL)

2. Videsh Sanchar Nigam Ltd. (VSNL)

3. Indian Oil Corporation Ltd. (IOC)

4. Indian Pharmaceuticals Corporation Ltd. (IPCL)

5. Steel Authority of India Limited (SAIL)

6. Oil and Natural Gas Corporation Ltd. (ONGC)

7. National Thermal Power Corporation Ltd. (NTPC) 

8. Bharat Heavy Electronics Ltd. (BHEL)

9. Bharat Petroleum Corporation Ltd. (BPCL)

10. Mahanagar Telephone Nigam Limited (MTNL)

11. Gas Authority of India Limited (GAIL)

Privatisation refers to transferring ownership of services and assets from the public sector to the private sector. The assets owned by the public sector can be sold to the private sector or the restrictions on competition between public & privately held companies may be eliminated. The main reason behind privatisation is to increase the efficiency of the private sector without the interruption of government. In other words, privatisation states that enterprises owned by the private sector are highly valued and maintained in a better way.

According to Priest, The transfer of ownership, property or business from the government to the private sector is termed privatisation. The government ceases to be the owner of the entity or business.

Disinvestment

The process of selling and liquidating assets by the government, generally, state and central enterprises, projects, and various other fixed assets is known as Disinvestment. The government undertakes this process to raise money for fulfilling specific needs or to lower the fiscal burden on the exchequer. In various cases, disinvestment is carried out to privatize assets; however, all disinvestment is not Privatisation. Various benefits of disinvestment are:

• It allows the government and even companies to reduce their debt.
• It is beneficial for the long-term growth of the country.
• It promotes the development of a strong capital market in the country by providing a larger share of PSU ownership in the open market.

Objectives of Disinvestment in India

Disinvestment is done: 

• To help public sector enterprises to upgrade their technology and become more competitive.
• To reduce the financial burden on the government.
• To depoliticize essential services.
• To promote a larger share of ownership.
• To improve public finances.
• To retain & rationalize their workforce.
• To make the market more discipline and competitive.
• To initiate diversification & expansion programs.