Definition
Disinvestment Target
The disinvestment target is the amount the government budgets to raise in a financial year by selling stakes in public sector enterprises.
Each Union Budget sets a disinvestment target as part of non-debt capital receipts, alongside revenue from spectrum and asset monetisation. Hitting the target reduces the need for market borrowing to fund the deficit. In practice, actual proceeds often fall short because market conditions and the readiness of candidate companies are hard to predict.
Because it is volatile, analysts treat disinvestment receipts as one of the softer assumptions in the Budget arithmetic. Governments have at times broadened the strategy from one-off stake sales toward steadier asset monetisation pipelines to make receipts more predictable.
Related terms
- DisinvestmentDisinvestment is the sale by the government of part or all of its stake in a public sector enterprise to raise resources or improve efficiency.
- Strategic SaleA strategic sale is disinvestment in which the government sells a controlling stake in a public sector firm together with management control to a private buyer.
- Asset MonetisationAsset monetisation is the practice of leasing or transferring the operating rights of existing public assets to private players to raise upfront capital without selling ownership.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.