Question

As per a news report dated 8th Oct. 2021, the Government of India sold its entire 100% stake in Air India. Tata Sons, the original founder of Air India, won the bid and purchased the airline for 18,000 crore.
(1) Identify the step taken by the Government of India.
(2) State any two ways in which the identified step can be executed by the government.

Hint:

Privatization can help improve the efficiency of state-owned enterprises by bringing in private sector expertise and reducing the financial burden on the government.

Answer 1

(1) Step taken by the Government of India: The government took the step of privatizing Air India by selling its entire 100% stake to the Tata Group. This is part of the broader disinvestment policy aimed at reducing the public sector's involvement in non-strategic sectors. (2) Ways in which this step can be executed:
1. Auction or Bidding Process: The government can execute the privatization by conducting an auction or bidding process where interested private entities place bids for the ownership of the public sector enterprise. In this case, Tata Sons participated in the bidding process and won the bid for Air India.
2. Sale of Shares to Private Investors: The government can also execute privatization by selling shares of a public sector company to private investors through the stock market. This method allows for a gradual transfer of ownership while raising capital for the government.