Disinvestment in India is a politically sensitive issue, often mired in controversy and has vacillated between extremes of vigorous pursuit to dormant status, as a priority area of economic reforms. This article attempts to trace the evolution of disinvestment policy in India over the last two decades and analyze the benefits and problems associated with various methods of disinvestment used in India. The article also suggests a possible roadmap for future disinvestment activities.

The birth of modern disinvestment is often associated with Margaret Thatcher's government which came to power in the United Kingdom in 1979. Margaret Thatcher adopted the policy of `privatization' for the divestiture of state-owned enterprises ; the term privatization was originally coined by the great management thinker Peter Drucker. The state-owned enterprises in the UK were suffering from inefficiency and lack of market discipline which paved the way for privatization or disinvestment as an effort to improve economic conditions. Subsequently, UK Government divested its stake in major PSUs like British Telecom, British Air, British Power, British Petroleum and British Rail.

Thatcher government may not have been the first in the world to launch a disinvestment program but the UK experiment of privatization is the most important historically as it triggered a wave of privatization initiatives worldwide. The success of UK experiment and influence of international organizations such as the World Bank and the International Monetary Fund propelled a global movement towards privatizing state-owned enterprises. World Bank's influential publication, Bureaucrats in Business (1995), categorically asked whether state-owned enterprises are part of the economic problems confronting countries and confirmed in the affirmative by explaining that the extension of the state in provision of private goods and services resulted in serious loss of efficiency, waste and lost growth opportunities for many less developed economies.

Managerial Economics Journal, Disinvestment in India, Future Roadmap, International Organizations, Disinvestment Program, Economic Development, Economic Reforms, International Organizations, Social Sector Programs, Economic Crisis, Macroeconomic Crisis, Foreign Investment Policies, Public Sector Enterprises, National Investment Fund, Central Public Sector Units, Economic Policies.