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Fiscal Developments 59

Non-Debt Capital Receipts

2.26 Non-debt capital receipts mainly consist of recovery of loans and advances, and disinvestment
receipts. The share of recovery of loans has declined over the years following disintermediation
of loan portion of Central assistance to States consequent to the recommendation of the Twelfth
Finance Commission, and States allowed to borrow directly from the market. The Budget for
2021-22 has envisaged generation of ` 1.88 lakh crore of non-debt capital receipts, comprising
` 1.75 lakh crore of disinvestment receipts. In order to minimize the presence of the Government
in the PSEs across all sectors of the economy, the Government has adopted a new disinvestment
policy for Atmanirbhar Bharat in February 2021. The evolution of the disinvestment policy of
the Government may be seen at Box 2.

Box 2: Evolution of the Disinvestment Policy of the Government of India

With the passing of the Constitution (First Amendment) Act, 1951, nationalisation of private firms
became a standard policy tool by the Government. The Act stated that ‘the citizen’s right to practise
any profession or to carry on any occupation, trade or business conferred by article 19(1)(g) is subject
to reasonable restrictions which the laws of the State may impose “in the interests of general public”’.
The Act allowed for nationalisation or trading by the state in any business.

Soon under the Air Corporations Act, 1953, the Government nationalised nine airlines—Air India,
Air Services of India, Airways (India), Bharat Airways, Deccan Airways, Himalayan Aviation, Indian
National Airways, Kalinga Airlines, and Air India International—and brought them under two PSEs,
Indian Airlines, and Air India International. This was followed by nationalisation of life insurance in
1956 through the Life Insurance Corporation Act 1956, whereby 154 Indian insurers, 16 non-Indian
insurers, and 75 provident societies were nationalised into Life Insurance Corporation of India (LIC).
Through the General Insurance Business (Nationalisation) Act, 1972, the general insurance business
of 55 Indian companies and the 52 foreign insurers was nationalised. Further in the banking system,
the government nationalised 14 banks in 1969 through the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1970, followed up by a second round of bank nationalisation in 1980,
through which another six banks were nationalised. Coal mines were also nationalised during the
period 1971-1975. Nevertheless, the issue of nationalisation has always been a highly debated issue,
to the extent that in the year 1958, the then Finance Minister, Mr. TT Krishnamachari, had to resign
owing to controversies around nationalisation of LIC (Mundhra Scandal, 1958).

After the 1991 reforms, there was a transition in thinking about public and private sector. The term
‘disinvestment’ was used first time in Interim Budget 1991. However, the policy on disinvestment
gathered steam under the Government of PM Vajpayee, when a new Department of Disinvestment
was created in 1999, which became a full Ministry in 2001. It was during this period that the concept
of strategic sales of state-owned companies became a part of policy debate. This government stakes
were sold in as many as 12 public sector companies during this tenure, including Maruti Udyog,
Hindustan Zinc, Bharat Aluminum and Videsh Sanchar Nigam Limited. The process of disinvestment
continued intermittently over the next decade 2004-2014, until the recent emphasis in this direction
over the last five years.