UPSC Prelims 2011·GS1·economy·public finance

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?

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Last updated 8 Jul 2026, 4:39 pm IST
  1. A1 only
  2. B2 only
  3. CBoth 1 and 2
  4. DNeither 1 nor 2Correct

Explanation

Explanation:

Statement 1 is incorrect. The revenue from disinvestment is primarily used for funding social sector schemes, infrastructure development, recapitalizing public sector banks, and reducing the fiscal deficit. While debt repayment can be a minor component, it is not the main or primary purpose, especially not specifically external debt.

Statement 2 is incorrect. Disinvestment can take various forms. While strategic disinvestment involves transferring management control, many disinvestment exercises are minority stake sales where the government explicitly retains management control. The government's intent is not to universally give up management control of all CPSEs through disinvestment; often, the goal is to raise resources while maintaining control.

Since both statements are incorrect, the correct option is D.

economy: Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)? 1. The Governme
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