Why are profitable companies being sold?

February 07 2021

This year the government has set a target of raising one lakh 75 thousand crores by selling to public sector companies, and perhaps on this hope, the government is claiming that the current fiscal deficit, which is about 9.30 percent, will be reduced in the next financial year to 6.8 percent. It is worth remembering that last year, the target was to earn 2 lakh 10 thousand crores by selling to government companies, but in the meantime, the outbreak of Corona pandemic happened due to which the government had to revise its target to 60 thousand crores, but it could only muster 19,499 crore rupees. sidelining the whole theory of disinvestment, the government intends to sell the profitable ‘Maharatna’ companies this time around, as no buyers were coming forward to buy the loss-making state-owned companies. Hence the government has to sell flagship companies like LIC and Bharat Petroleum and Shipping Corporation of India. Apart from this, two state-owned banks are also ready to be sold. Bharat Petroleum is earning 8 thousand crores every year, the government will get 63 thousand crores only by selling 52% of its stake. Once LIC is listed on the stock market, it will become the company with the largest market capital i.e. it can have a market capital of 10 lakh crores, if the government also sells 25 percent of it, then it will get 2.5 lakh crores in its bag. Perhaps this is how the government is claiming to reduce its financial deficit.

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