The Disinvestment Commission was set up on 23.8.1996 for a period of 3 years with the following terms of reference :

1. To draw a comprehensive overall long term disinvestment programme within 5-10 years for the PSUs referred to it by the Core Group.

2. To determine the extent of disinvestment (total/partial indicating percentage) in each of the PSU.

3. To prioritise the PSUs referred to it by the Core Group in terms of the overall disinvestment programme.

4. To recommend the preferred mode(s) of disinvestment (domestic capital markets/international capital markets/auction/private sale to identified investors/any other) for each of the identified PSUs. Also to suggest an appropriate mix of the various alternatives taking into account the market conditions.

5. To recommend a mix between primary and secondary disinvestments taking into account Government's objective, the relevant PSU's funding requirement and the market conditions.

6. To supervise the overall sale process and take decisions on instrument, pricing, timing etc. as appropriate.

7. To select the financial advisers for the specified PSUs to facilitate the disinvestment process.

8. To ensure that appropriate measures are taken during the disinvestment process to protect the interests of the affected employees including encouraging employees' participation in the sale process.

9. To monitor the progress of disinvestment process and take necessary measures and report periodically to the Government on such progress.

10. To assist the Government to create public awareness of the Government's disinvestment policies and programmes with a view to developing a commitment by the people.

11. To give wide publicity to the disinvestment proposals so as to ensure larger public participation in the shareholding of the enterprises.

12. To advise the Government on possible capital restructuring of the enterprises by marginal investments, if required, so as to ensure enhanced realization through disinvestment.

The Disinvestment Commission will be an advisory body and the Government will take a final decision on the companies to be disinvested and mode of disinvestment on the basis of advice given by the Disinvestment Commission. The PSUs would implement the decision of the Government under the overall supervision of the Disinvestment Commission.

The Commission, while advising the Government on the above matters, will also take into consideration the interests of stakeholders, workers, consumers and others having a stake in the relevant public sector undertakings.

Modified Terms Of Reference

The terms of reference of Disinvestment Commission were modified on 12.1.1998. The modified terms of reference were as follows:

1. Disinvestment Commission shall be an advisory body and its role and function would be to advise the Government on disinvestment in those public sector units that are referred to it by the Government.

2. The Commission shall also advise the Government on any other matter relating to disinvestment as may be specifically referred to it by the Government, and also carry out any other activities relating to disinvestment as may be assigned to it by the Government.

3. In making its recommendations, the Commission will also take into consideration the interests of workers, employees and others stake holders, in the public sector unit(s).

4. The final decision on the recommendations of the Disinvestment Commission will vest with the Government.

72 Public Sector Enterprises (PSEs) were referred to Disinvestment Commission, out of which 47 were profit making. The Disinvestment Commission gave its report on 58 Public Sector Enterprises, out of which 38 were profit making. In these 58 PSEs, the following methods of sale were recommended :