Because of the current revenue expenditure on items such as interest payments, wages and salaries of Government employee and subsidiaries, the Government is left with hardly any surplus for capital expenditure on social and physical infrastructure. Whereas the Government should be spending on basic education, primary health and family welfare, huge amounts of resources are blocked in several non-strategic sectors such as hotels, trading companies, consultancy companies, textile companies, chemical and pharmaceuticals companies, consumer goods companies etc. Not only this - the continued existence of the PSEs is forcing the Government to commit further resources for the sustenance of many non-viable PSEs. The Government continues to expose the taxpayers' money to risk, which it can readily avoid. To top it all, there is a huge amount of debt overhang, which needs to be serviced and reduced before money is available to invest in infrastructure. This makes disinvestment of the Government stake in the PSEs absolutely imperative.

The primary objectives for privatising the PSEs are, therefore, as follows:

Releasing the large amount of public resources locked up in non-strategic PSEs, for redeployment in areas that are much       higher on the social priority, such as, basic health, family welfare, primary education and social and essential infrastructure;

Stemming further outflow of these scarce public resources for sustaining the unviable non-strategic PSEs;

Reducing the public debt that is threatening to assume unmanageable proportions;

Transferring the commercial risk, to which the taxpayers' money locked up in the public sector is exposed, to the private       sector wherever the private sector is willing and able to step in - the money that is deployed in the PSEs is really the public       money and is exposed to an entirely avoidable and needless risk, in most cases;

Releasing other tangible and intangible resources, such as, large manpower currently locked up in managing the PSEs, and       their time and energy, for redeployment in high priority social sectors that are short of such resources;

The other benefits expected to be derived from privatisation are :

Disinvestment would expose the privatised companies to market discipline, thereby forcing them to become more efficient       and survive or cease on their own financial and economic strength. They would be able to respond to the market forces much       faster and cater to their business needs in a more professional manner. It would also facilitate in freeing the PSEs from the       Government control and introduction of corporate governance in the privatised companies.

Disinvestment would result in wider distribution of wealth through offering of shares of privatised companies to small investors       and employees.

Disinvestment would have a beneficial effect on the capital market; the increase in floating stock would give the market more       depth and liquidity, give investors easier exit options, help in establishing more accurate benchmarks for valuation and       pricing, and facilitate raising of funds by the privatised companies for their projects or expansion, in future.

Opening up the public sector to appropriate private investment would increase economic activity and have an overall beneficial       effect on the economy, employment and tax revenues in the medium to long term.

In many areas, e.g., the telecom sector, the end of public sector monopoly would bring relief to consumers by way of more       choices, and cheaper and better quality of products and services - as has already started happening.