Impact of Disinvestment on the Financial and Operating Performance of the Petroleum Sector in India

Abstract

The Indian economy faced an unprecedented macro-economic crisis during 1990-91 mainly due to the large imbalances on the internal and external account. The Government has adopted economic reforms to boost economy for a higher-level investment of national income and employment. The Government has announced its policy that the main objective of disinvestment is to put national resources and assets to optimal use and in particular, to unleash the productive potential inherent in our public sector enterprises. The units in which Government made highest disinvestment are- Gas Authority of India Ltd., Hindustan Petroleum Corporation Ltd., Hindustan Organic Chemicals Ltd., Indian Petrochemicals Corporation Ltd. and Mahanagar Telephone Nigam Ltd. After disinvestment, the profitability and the efficiency of the utilization of the resources of the petroleum sector has improved. At the individual level, the management of the IOCL failed in controlling its various expenditures in the post-disinvestment period as compared to the pre-disinvestment period.