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?
Answer & explanation
Answer: (d) Neither 1 nor 2
Neither statement is correct, so the answer is (d). Under the disinvestment policy in force in 2011, the Government sells part of its equity in CPSEs but keeps at least 51% ownership and management control. Disinvestment proceeds go to the National Investment Fund for capital expenditure on selected social sector programmes, not to repaying external debt.
- ✗ 1. Disinvestment proceeds were channelled into the National Investment Fund. From April 2009 to March 2012 they were available in full for capital expenditure on selected social sector programmes. Repaying external debt was not the stated use.
- ✗ 2. The policy aims to develop 'people's ownership' of CPSEs. It also ensures that Government equity does not fall below 51% and that the Government keeps management control. So the Government does intend to retain control.
Remember · Disinvestment policy (2009): Government equity stays at or above 51% and management control stays with the Government. Proceeds go to the National Investment Fund for social sector programmes.
Sources
- Ministry of Finance Annual Report 2009-10, Department of Disinvestment ↗ “Proceeds from disinvestment would be channelised into National Investment Fund and during April 2009 to March 2012 would be available in full for meeting the capital expenditure requirements of selected Social Sector Programmes”
- Public Enterprises Survey 2010-11 (Department of Public Enterprises), Government Disinvestment in CPSEs ↗ “The objective of disinvestment policy was to develop people’s ownership of CPSEs and to share in their wealth and prosperity while ensuring that government equity does not fall below 51% and Government retains the management control.”
Question: UPSC Civil Services (Preliminary) 2011, General Studies Paper I. Explanation: Minimalist IAS, checked 25 Oct 2026 (how we verify). ·
