The Indian Government has released a Request for Proposal (RFP) to engage an asset value for the Strategic Disinvestment of IDBI Bank. Strategic disinvestment involves the sale of a significant portion (up to 50% or more) of the government’s shareholding in a central public sector enterprise (CPSE) along with the transfer of management control to another entity, either public or private. This differs from disinvestment, where the government sells minority shares but retains ownership. The objectives of strategic disinvestment include reducing government ownership, raising capital, enhancing efficiency, fostering competition, attracting private investment, focusing on core functions, and reducing the fiscal burden.
Facts/Terms for UPSC Prelims
- Request for Proposal (RFP): A Request for Proposal is a formal document inviting qualified individuals or firms to submit proposals for specific projects or services, in this case, asset valuation for the IDBI Bank disinvestment.
- Central Public Sector Enterprise (CPSE): A CPSE is a government-owned company that operates in various sectors of the economy. Strategic disinvestment often involves reducing government ownership in CPSEs.
- Minority Shares: Selling minority shares means divesting a portion of government ownership in a public enterprise while retaining a majority stake.
- Fiscal Burden: Reducing the fiscal burden implies that the government aims to lessen the financial obligations associated with owning and supporting public enterprises.
