All Courses
Explore Courses UPSC Exam UPSC Test Series Free Notes EduRev Infinity Get the App Login Join for Free
Sign in Open App
UPSC Exam  >  UPSC Questions  >  Consider the following statements regarding t... Start Learning for Free
SaveJoin the Discussion on the App
Consider the following statements regarding the privatization of the public sectors:
1. Privatization of the public sector enterprises (PSEs) by selling off part of the equity of them is known as disinvestment.
2. The purpose of the privatization is mainly to improve financial discipline and facilitate modernization.
Which of the above statements is/are correct?
  • a)
    1 only
  • b)
    2 only
  • c)
    Both 1 and 2
  • d)
    Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
FREE This question is part of
Download PDF Attempt Test
Download PDF Attempt this Test
Verified Answer
Consider the following statements regarding the privatization of the p...
  • Both statements are correct
Supplementary notes:
Privatization
  • Privatization implies the shedding of the ownership or management of a governmentowned enterprise. Government companies are converted into private companies in two ways:
  • By the withdrawal of the government from ownership and management of public sector companies and/or
  • By the outright sale of public sector companies.
  • Privatization of the public sector enterprises (PSEs) by selling off part of the equity of PSEs to the public is known as disinvestment.
  • The purpose of the sale is mainly to improve financial discipline and facilitate modernization. It is also envisaged that private capital and managerial capabilities could be effectively utilized to improve the performance of the public sector units (PSUs).
  •  An efficient and profit earning PSU is a revenue generator for the government. But if a PSU is an inefficient and loss-making one, then the same PSU exerts unnecessary burden on the government’s scarce revenues and further may lead to the budget deficit. Hence the loss-making PSUs should be privatized whereas it would be unfair to privatize a profit-making PSU.
  • Instead of privatization of profit-making PSUs, the government can allow more degree of autonomy and accountability in their operations, which will not only increase their productivity and effi ciency but also enhance their competitiveness with their private counterparts.
View all questions of this test
Most Upvoted Answer
Consider the following statements regarding the privatization of the p...

Privatization of Public Sectors

Privatization of public sector enterprises (PSEs) involves selling off part of their equity, which is known as disinvestment. This process allows private investors to own shares in these previously government-owned entities.

Purpose of Privatization

The main purpose of privatization is to improve financial discipline and facilitate modernization within the public sector. By bringing in private ownership and management, efficiency and productivity can increase, leading to better performance and profitability.

Therefore, both statements are correct as disinvestment is a form of privatization, and the ultimate goal of privatization is to enhance financial discipline and modernize the public sector.
< Previous Question Next Question >
Explore Courses for UPSC exam

Similar UPSC Doubts

It is often forgotten that globalization, is not only about policies on international economic relationships and transactions, but has equally to do with domestic policies of a nation. Policy changes necessitated by meeting the internationally set conditions (by WTO etc.) of free trade and investment flows obviously affect domestic producers and investors. But the basic philosophy underlying globalization emphasizes absolute freedom to markets to determine prices and production and distribution patterns, and view government interventions as processes that create distortions and bring in inefficiency. Thus, public enterprises have to be privatized through disinvestments and sales; sectors and activities hitherto reserved for the public sector have to be opened to the private sector. This logic extends to the social services like education and health. Any restrictions on the adjustments in workforce by way of retrenchment of workers should also be removed and exit should be made easier by removing any restrictions on closures. Employment and wages should be governed by free play of market forces, as any measure to regulate them can discourage investment and also create inefficiency in production.Above all, in line with the overall philosophy of reduction in the role of the state, fiscal reforms should be undertaken to have generally low levels of taxation and government expenditure should be kept to the minimum to abide by the principle of fiscal prudence. All these are policy actions on the domestic front and are not directly related to the core items of the globalization agenda, namely free international flow of goods and finance.Q.According to the passage, which of the following is/are necessary for ensuring globalization?1. Privatization of public enterprises2. Expansionary policy of public expenditure3. Free play of market forces to determine wages and employment4. Privatization of social services like education and health.

Top Courses for UPSCView all

Top Courses for UPSC

Consider the following statements regarding the privatization of the public sectors:1. Privatization of the public sector enterprises (PSEs) by selling off part of the equity of them is known as disinvestment.2. The purpose of the privatization is mainly to improve financial discipline and facilitate modernization.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
Question Description
Consider the following statements regarding the privatization of the public sectors:1. Privatization of the public sector enterprises (PSEs) by selling off part of the equity of them is known as disinvestment.2. The purpose of the privatization is mainly to improve financial discipline and facilitate modernization.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding the privatization of the public sectors:1. Privatization of the public sector enterprises (PSEs) by selling off part of the equity of them is known as disinvestment.2. The purpose of the privatization is mainly to improve financial discipline and facilitate modernization.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding the privatization of the public sectors:1. Privatization of the public sector enterprises (PSEs) by selling off part of the equity of them is known as disinvestment.2. The purpose of the privatization is mainly to improve financial discipline and facilitate modernization.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?.
Solutions for Consider the following statements regarding the privatization of the public sectors:1. Privatization of the public sector enterprises (PSEs) by selling off part of the equity of them is known as disinvestment.2. The purpose of the privatization is mainly to improve financial discipline and facilitate modernization.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC. Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
Here you can find the meaning of Consider the following statements regarding the privatization of the public sectors:1. Privatization of the public sector enterprises (PSEs) by selling off part of the equity of them is known as disinvestment.2. The purpose of the privatization is mainly to improve financial discipline and facilitate modernization.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Consider the following statements regarding the privatization of the public sectors:1. Privatization of the public sector enterprises (PSEs) by selling off part of the equity of them is known as disinvestment.2. The purpose of the privatization is mainly to improve financial discipline and facilitate modernization.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?, a detailed solution for Consider the following statements regarding the privatization of the public sectors:1. Privatization of the public sector enterprises (PSEs) by selling off part of the equity of them is known as disinvestment.2. The purpose of the privatization is mainly to improve financial discipline and facilitate modernization.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of Consider the following statements regarding the privatization of the public sectors:1. Privatization of the public sector enterprises (PSEs) by selling off part of the equity of them is known as disinvestment.2. The purpose of the privatization is mainly to improve financial discipline and facilitate modernization.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Consider the following statements regarding the privatization of the public sectors:1. Privatization of the public sector enterprises (PSEs) by selling off part of the equity of them is known as disinvestment.2. The purpose of the privatization is mainly to improve financial discipline and facilitate modernization.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? tests, examples and also practice UPSC tests.
Explore Courses for UPSC exam

Top Courses for UPSC

Explore Courses
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Get App
© EduRev
Education Revolution
Follow Us
Signup to see your scores go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup