Disinvestment refers to the process of selling or liquidating an existing asset, investment, or subsidiary, either partially or fully. In financial and economic contexts, it typically involves the government or a corporation reducing its stake in a business or public sector enterprise to raise funds, improve efficiency, or meet strategic objectives.

In India, disinvestment is most commonly associated with the governmentís sale of equity in Public Sector Undertakings (PSUs). The primary objective is to unlock value, reduce the fiscal burden, and promote private participation in sectors traditionally dominated by the state. The Department of Investment and Public Asset Management (DIPAM), under the Ministry of Finance, oversees and implements the governmentís disinvestment policy.

Disinvestment can take various forms, including minority stake sales (where the government retains control), strategic disinvestment (where a controlling stake is transferred to private players), or listing PSUs on stock exchanges through Initial Public Offerings (IPOs). Each method is chosen based on market conditions, sectoral importance, and the governmentís financial goals.

For corporations, disinvestment may occur when a company sells a non-core asset, business division, or subsidiary to streamline operations, focus on core activities, or raise capital. This helps in improving operational efficiency and optimizing resource allocation.

Disinvestment also contributes to market development and economic growth by promoting wider ownership, encouraging competition, and enhancing transparency through public shareholding. However, it must be executed carefully to balance fiscal objectives with long-term public interest and employee welfare.

In summary, disinvestment is a strategic financial decision used by both governments and private enterprises to restructure portfolios, raise funds, and enhance efficiency. When managed responsibly and transparently, it supports economic reforms, improves governance, and contributes to the overall dynamism of the economy.