Explain disinvestment.
Explain disinvestment.
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Solution and Explanation
Public Sector Enterprises (PSEs) are firms owned and run by the government. The new economic policy of 1991 asked the government to reduce its role in such firms.
Step 2: Meaning of disinvestment:
Disinvestment means the privatisation of Public Sector Enterprises by selling off part of their equity to the public.
Equity is the share capital of the firm. When the government sells some of these shares, its ownership in the firm falls.
Step 3: Point to remember:
The sale may be of a part or of the whole of the equity. The money raised goes to the government.
Final Answer:
Disinvestment is the privatisation of Public Sector Enterprises by selling off part of their equity to the public.
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