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?

Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)? 1. The Government intends to use … Which of the statements given above is/are correct? — UPSC Prelims 2011 Answer & Explanation

Economy2011

Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)?

The Government intends to use the revenue earned
The Government no longer intends to retain the

management control of the CPSEs. Which of the statements given above is/are correct?

Explanation

The correct option is "Neither 1 nor 2" because the Government of India primarily disinvests its equity in Central Public Sector Enterprises (CPSEs) to enhance efficiency, attract private investment, and reduce fiscal burden rather than specifically to pay back external debt or relinquish management control. While debt management can be a financial strategy, the overarching aim of disinvestment is to improve governance and operational efficiency by involving the private sector, thereby revitalizing underperforming enterprises and generating revenue for developmental purposes, rather than for the explicit purpose mentioned in statement 1 or the complete relinquishment suggested in statement 2.

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