Mains Paper 3 : Indian Economy |
From UPSC perspective, the following things are important :
Prelims level : Nothing much
Mains level : Budget decision on public shareholding and its impact
The government’s budget decision to raise the minimum public shareholding in listed companies to 35% from 25% has worried the markets.
- The number of companies that would be affected by this proposal is quite large. As many as 1,100 listed companies currently have a promoter stake of more than 65% – reduction to the prescribed limit could entail as much as a trillion rupees worth of share sales.
- This may lead the promoters to rush through the sales at low prices since share prices are mostly in a slump.
- A slowdown in the economy and a pullout by foreign investors are also pressuring markets.
- Defer the implementation of the proposal to a day when the economy is in better shape
- Companies should be allowed a few years to comply so that fire sales are avoided. This way, promoters would get the best value for their shares. It will ensure markets face the least disruption.