Question:
Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)?
1. The Government intends to use the revenue earned from disinvestment mainly to pay off external debt.
2. The Government no longer intends to retain management control of CPSEs.
Which of the statements given above is/are correct?
Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)?
1. The Government intends to use the revenue earned from disinvestment mainly to pay off external debt.
2. The Government no longer intends to retain management control of CPSEs.
Which of the statements given above is/are correct?
1. The Government intends to use the revenue earned from disinvestment mainly to pay off external debt.
2. The Government no longer intends to retain management control of CPSEs.
Which of the statements given above is/are correct?
Show Hint
Government disinvestment is usually a minority stake sale; control typically stays with the government.
Updated On: Jul 15, 2026
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Show Solution
Verified By Collegedunia
The Correct Option is D
Solution and Explanation
Step 1: Understanding the Concept.
Disinvestment means the government sells part of its shareholding in public sector companies, usually to raise funds and improve efficiency.
Step 2: Check statement 1.
Disinvestment proceeds in India are mainly used for plan expenditure, social sector schemes, and deficit financing, not specifically earmarked to repay external debt, so statement 1 is false.
Step 3: Check statement 2.
In most disinvestment rounds, especially minority stake sales, the government continues to retain majority ownership and management control of the CPSE. Giving up control is not the stated intention, so statement 2 is false.
Step 4: Final Answer.
Neither statement correctly explains the reason for disinvestment, so the answer is option D.
Disinvestment means the government sells part of its shareholding in public sector companies, usually to raise funds and improve efficiency.
Step 2: Check statement 1.
Disinvestment proceeds in India are mainly used for plan expenditure, social sector schemes, and deficit financing, not specifically earmarked to repay external debt, so statement 1 is false.
Step 3: Check statement 2.
In most disinvestment rounds, especially minority stake sales, the government continues to retain majority ownership and management control of the CPSE. Giving up control is not the stated intention, so statement 2 is false.
Step 4: Final Answer.
Neither statement correctly explains the reason for disinvestment, so the answer is option D.
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