Budget FAQs: What is divestment?

Disinvestment or divestment is defined as the government's action of selling or liquidating its stake in a public sector unit asset or subsidiary.

This is done when PSUs start turning into liabilities and start showing a negative rate of return, in turn pressuring government resources. In such cases, disinvestment helps to bring down the financial burden being imposed by inefficient PSUs on the public finances, raise money and put the proceeds to better use.