UPSC Daily Editorial Analysis | 9 May 2022

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What the article is about?

  • Talks about the role of government in business investments.

Syllabus: GS-III Issues relating growth and development, disinvestment, privatisation

Government in business:

  • The Government of Singapore Investment Corporation (GIC) invests internationally in equities.
    • It owned shares worth about ₹1.09 lakh crore at the end of March 2022 in India alone.
    • Around the world, GIC investments amount to about ₹55 lakh crore. GIC is the eight largest wealth management fund in the world.
    • The money doubled in real terms in the last 20 years.
    • This money is also used by the government for public welfare.
  • China is doing the same.
    • The Municipal Government of Hefei invested $787 million to acquire a 17% stake in Nio’s core business and shortly after that exited making a profit of 5.5 times its investment.
    • By 2017, Chinese government-owned companies had invested ₹67.5 lakh crore in overseas companies.
    • This is about 27% of India’s GDP.
  • Meanwhile, in India, we are disinvesting.
    • The total market value of Indian government holdings is only ₹13 lakh crore, far less than China or even Singapore.
    • The Navratna PSUs are performing well, but are being sold.
  • As China increases its global influence, India is bartering away one source of such influence – its ability to invest overseas and create greater economic clout
  • The prevailing ideology that the government has no business to be in business is used to justify disinvestment.
    • The real reason is the growing government deficit.
  • India uses a western ideology about government-owned companies, but forgets that what the West preaches is for others and what it practices is in national self-interest.
    • The world’s list of top asset-holding PSUs includes the U.S., Israel and the European Union counties. But there are none from India. 

Way Ahead:

  • While the smaller and loss-making ones need to be disinvested, the profitable ones can be reformed.
    • The only problem in India is archaic rules governing PSUs and political interference.
    • Other talents from the private sector can also be brought in.
    • Salaries for key top personnel should be in line with worldwide best practices, along with real accountability. 


  • If the Indian government invests like Singapore, that will give it much more funds than disinvestment ever can.
    • Meanwhile, ownership remains intact.
  • Another powerful reason is managing government finances.
    • The only avenue for revenue generation seems to be taxes.
    • However, markets, wealth management and dividends are not explored. 


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