How did disinvestment cause loss to the government?

Proceeds from disinvestment were used to offset the shortage of government revenues

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Proceeds from disinvestment were not used to development of PSUs and building social infrastructure

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Assets of PSUs were undervalued and sold to the private sector

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All of the above

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Solution

The correct option is D All of the above
The assets of PSUs have been undervalued and sold to the private sector. This means that there has been a substantial loss to the government. Moreover, the proceeds from disinvestment were used to offset the shortage of government revenues rather than using it for the development of PSUs and building social infrastructure in the country.

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Similar questions

(A) Liberalization	(1) Refers to partial or full transfer of ownership and control of PSUs to the private sector.
(B) Privatization	(2) Refers to relaxation of government's restriction in the scope of economic and social polices.
(C) Disinvestment	(3) Refers to a method of privatization, whereby part of shareholdings of a PSU is sold to the private sector.

Government of India's Disinvestment Policy was recast in 2000 to provide for 'strategic sale' of PSU shares. The new policy involves:

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