Difference between Disinvestment and privatization
- Privatization involves transforming the ownership of a public sector business to the private sector known as a ‘strategic buyer’. In privatization, full ownership is transferred to the strategic partner.
- In disinvestment, the same transformation process happens while retaining 26% or in some cases 51% percent of share right (i.e. the voting power) with the public sector organization.
- In disinvestment 26% or 51% of share is retained with the government company and the rest is transferred to the strategic partner. Here, the ownership is not transferred to strategic buyer.