Question

Assertion (A): The government sells its shares in several public sector companies as part of the process of disinvestment.
Reason (R): Many government workers are scared that they will lose their job after disinvestment.

• A. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
• B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
• C. Assertion (A) is true, but Reason (R) is false.
• D. Assertion (A) is false, but Reason (R) is true.

Hint:

Disinvestment is a key element of Neo-liberalism and privatisation, where the state decreases its direct control over the industrial sector and allows market forces to operate.

Answer 1

The Correct Option is B

Step 1: Evaluating the Assertion (A):
Disinvestment refers to the process where the government dilutes or sells its equity/shares in public sector undertakings (PSUs) to private buyers or the general public. This has been a core economic strategy of the Indian government since the economic liberalisation policies of 1991. Thus, the assertion is True.

Step 2: Evaluating the Reason (R):
Private entities often prioritize efficiency and profit-maximization, which frequently leads to restructuring, downsizing, or the loss of protected public sector employee benefits. Consequently, PSU workers often fear job insecurity, wage cuts, and layoffs post-privatization. Thus, the reason is True.

Step 3: Evaluating the Logical Link:
Although both statements are factually correct, the workers' fear (R) is a consequence or political reaction to the disinvestment process. It is not the cause or reason why the government decides to sell its shares. The government disinvests to reduce its fiscal deficit, encourage private investment, and improve company efficiency. Thus, (R) is not the correct explanation of (A).