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Impact Assessment of Investment Returns in Indian CPSEs: A Study at Aggregate Level in the Disinvestment Environment

Ghosh, Sudipta and Aithal, Sreeramana (2022): Impact Assessment of Investment Returns in Indian CPSEs: A Study at Aggregate Level in the Disinvestment Environment. Published in: International Journal of Case Studies in Business, IT, and Education (IJCSBE) , Vol. 6, No. 1 (24 January 2022): pp. 26-37.


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Purpose: The CPSEs were established by the administration of Indian Govt. to serve macro-economic objectives of our country. They are viewed as a device for growth of the economy with fairness and social justice. Due to unsatisfactory performance of the CPSEs towards fulfillment of the socio-economic objectives of our country, the Govt. of India started the process of disinvestment from the financial year 1991-92 to ensure optimum utilization of national wealth and to augment return on investment of the CPSEs in India. With this background, the current paper is an effort to measure the change (i.e., impact) in investment returns of the CPSEs in the disinvestment environment during the period 2010-11 to 2019-20. Design/Methodology/Approach: Traditional investment ratios are employed for measurement of investment returns of the CPSEs on the basis of secondary data. To capture the impact in investment returns, paired t test is used in the study. Furthermore, the rate of growth related to investment returns are calculated by log linear regression method. Significant difference (if any) in the rate of growth related to different components of aggregate investment returns is measured by Chow statistic. Findings/Result: Aggregate financial investments have significantly increased. Though the growth rates of selected performance indicators are observed to be significantly positive in majority of the cases, no significant differences in growth rates of the same are found between the two sub-periods (except shareholders’ equity). Though significant increase in financial investment is observed during the years under study, impact of investment returns in the disinvestment environment is observed to be negative i.e., it indicates that investment returns (particularly ROCE and ROE) of the CPSEs at aggregate level have decreased significantly during the study period. Originality/Value: In the uninterrupted disinvestment environment, the present study has been conducted to examine the impact of investment returns through ROA, ROCE, and ROE.

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