Budget 2025: What is a strategic sale and how does it differ from disinvestment?
Union Budget 2025 approaches, set to be unveiled in February, it’s a good time to understand the concept of strategic disinvestment and how it differs from disinvestment. Here’s a simple breakdown:
What is Strategic Disinvestment?
Strategic disinvestment, also known as a strategic sale, is a government policy outlined in the Strategic Disinvestment Policy (2015–20) by the Department of Investment and Public Asset Management (DIPAM). It involves selling a large portion—up to 50% or more—of the government’s shares in Central Public Sector Enterprises (CPSEs). This process is combined with transferring the management control of these enterprises to private players.
The policy includes multiple approaches like minority stake sales through SEBI-approved methods, full-fledged strategic sales, and handing over management rights.
The government aims to use the resources from these sales to fund social welfare and development programmes. Additionally, it expects private buyers to introduce better management, fresh investments, and innovations, contributing to the growth of these companies.
How is Strategic Disinvestment Different from Regular Disinvestment?
Disinvestment involves selling minority shares in public enterprises to another entity, whether public or private, while the government retains ownership of the enterprise.
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