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 the disinvestment mainly to pay back the external debt. 2. The Government no longer intends to retain the management control of the CPSEs. Which of the statements given above is/are correct?

QUESTION

Medium

Economy

Prelims 2011

Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)?

The Government intends to use the revenue earned from the disinvestment mainly to pay back the external debt.
The Government no longer intends to retain the management control of the CPSEs.

Which of the statements given above is/are correct?

Select an option to attempt

Explanation

While the revenue generated from disinvestment can contribute to reducing the fiscal deficit or financing government expenditure, it is not solely earmarked for paying back external debt. Disinvestment is more broadly aimed at improving efficiency, promoting wider share ownership, introducing competition, and reducing the fiscal burden on the government.

The government may choose to retain a certain level of ownership and control even after disinvestment. The extent to which management control is retained or transferred depends on various factors, including strategic considerations, sectoral policies, and specific objectives of the disinvestment process.

Therefore, neither statement accurately represents the primary reasons for the Government of India's disinvestment in CPSEs.

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