Question

92. Consider the following statements regarding disinvestment:
1.Disinvestment and Privatization have same meaning since both involve the sale of Government’s share in the Public Sector Undertakings.
2.The proceeds from disinvestment of Central Public Sector Enterprises are channelized into National Investment Fund (NIF).
3. The objectives of disinvestment are to meet social sector needs as well as budgetary needs.
Which of the above statement(s) is/are correct?

• A. Only 1 and 2
• B. Only 1 and 3
• C. Only 2 and 3
• D. None of the above

Answer 1

The correct option is C Only 2 and 3

The term privatization is used for a stake sell in which there is a transfer of 51% or more equity to the private players. In disinvestment, the government sells only a part of the equity which is essentially less than 51% and in a manner so that ownership and management rights can be hold by the Government itself. Government had constituted the National Investment Fund (NIF) in November, 2005 into which the proceeds from disinvestment of Central Public Sector Enterprises were to be channelized.