Q18. Consider the following statements about Privatisation:

1. Complete privatisation is a form of majority disinvestment wherein 100% control of the company is passed on to a buyer.

2. Improving public finances is one of the objectives of privatization.

Which of the above statements are correct?

a) 1 only

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b) 2 only

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c) Both 1 and 2

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c) Neither 1 nor 2

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Solution

The correct option is C
c) Both 1 and 2

Complete Privatisation

Complete privatisation is a form of majority disinvestment wherein 100% control of the company is passed on to a buyer.

To reduce the financial burden on the Government

To improve public finances

To introduce, competition and market discipline

To fund growth

To encourage wider share of ownership

To depoliticize non-essential services

Importance of Disinvestment

Presently, the Government has about Rs. 2 lakh crore locked up in PSUs. Disinvestment of the Government stake is, thus, far too significant. The importance of disinvestment lies in utilization of funds for:

Financing the increasing fiscal deficit

Financing large-scale infrastructure development

For investing in the economy to encourage spending

For retiring Government debt- Almost 40-45% of the Centre’s revenue receipts go towards repaying public debt/interest

For social programs like health and education

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Q17. Consider the following statements:

1. A majority disinvestment is one such that, at the end of it, the government retains a majority stake in the company, typically greater than 51%, thus ensuring management control.

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Q. The Government of India is going to disinvest its ownership in one of the government companies. Even after disinvestment, the government will have a minority ownership in that company, but the company itself will be managed by a private party.

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Q. 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?

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Q18. Consider the following statements about Privatisation: 1. Complete privatisation is a form of majority disinvestment wherein 100% control of the company is passed on to a buyer. 2. Improving public finances is one of the objectives of privatization. Which of the above statements are correct?