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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 dis investment mainly to pay back the external debt.
2. The government no longer intends to retain the management control of the CPSEs.
Q. Which the correct statement given above is/are correct?
1. The government intends to use the revenue earned from the dis investment mainly to pay back the external debt.
2. The government no longer intends to retain the management control of the CPSEs.
Q. Which the correct statement given above is/are correct?
- a)1 only.
- b)2 only.
- c)Both 1 and 2.
- d)Neither 1 nor 2.
Correct answer is option 'D'. Can you explain this answer?
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Why is the government of India disinvesting its equity in the central ...
Explanation:
The correct answer to the question is option D, i.e., neither 1 nor 2.
The government of India is disinvesting its equity in the central public sector enterprises (CPSEs) for various reasons, which may include but are not limited to the following:
1. To raise funds for other developmental projects: The government may disinvest its equity in the CPSEs to raise funds for other developmental projects such as building roads, railways, hospitals, schools, etc. Disinvestment can generate significant amounts of revenue that can be utilized for various developmental projects, which in turn can boost economic growth and create employment opportunities.
2. To enhance efficiency and competitiveness: The government may disinvest its equity in the CPSEs to enhance their efficiency and competitiveness. The CPSEs may become complacent and inefficient if they are entirely dependent on the government for their funding and management. Disinvestment can bring in private sector expertise, technology, and capital, which can help improve the efficiency and competitiveness of the CPSEs.
3. To reduce the fiscal burden: The government may disinvest its equity in the CPSEs to reduce the fiscal burden on the exchequer. The CPSEs require significant amounts of capital infusion from the government to sustain their operations, which can put a strain on the government's finances. Disinvestment can reduce the government's fiscal burden and create fiscal space for other developmental projects.
4. To promote private sector participation: The government may disinvest its equity in the CPSEs to promote private sector participation in the economy. The private sector can bring in new ideas, technologies, and capital, which can help boost economic growth and create employment opportunities.
In conclusion, the disinvestment of equity in CPSEs is a complex decision that is influenced by various factors such as revenue generation, efficiency enhancement, fiscal burden reduction, and private sector participation promotion. Therefore, neither statement 1 nor statement 2 in the question is entirely correct.
The correct answer to the question is option D, i.e., neither 1 nor 2.
The government of India is disinvesting its equity in the central public sector enterprises (CPSEs) for various reasons, which may include but are not limited to the following:
1. To raise funds for other developmental projects: The government may disinvest its equity in the CPSEs to raise funds for other developmental projects such as building roads, railways, hospitals, schools, etc. Disinvestment can generate significant amounts of revenue that can be utilized for various developmental projects, which in turn can boost economic growth and create employment opportunities.
2. To enhance efficiency and competitiveness: The government may disinvest its equity in the CPSEs to enhance their efficiency and competitiveness. The CPSEs may become complacent and inefficient if they are entirely dependent on the government for their funding and management. Disinvestment can bring in private sector expertise, technology, and capital, which can help improve the efficiency and competitiveness of the CPSEs.
3. To reduce the fiscal burden: The government may disinvest its equity in the CPSEs to reduce the fiscal burden on the exchequer. The CPSEs require significant amounts of capital infusion from the government to sustain their operations, which can put a strain on the government's finances. Disinvestment can reduce the government's fiscal burden and create fiscal space for other developmental projects.
4. To promote private sector participation: The government may disinvest its equity in the CPSEs to promote private sector participation in the economy. The private sector can bring in new ideas, technologies, and capital, which can help boost economic growth and create employment opportunities.
In conclusion, the disinvestment of equity in CPSEs is a complex decision that is influenced by various factors such as revenue generation, efficiency enhancement, fiscal burden reduction, and private sector participation promotion. Therefore, neither statement 1 nor statement 2 in the question is entirely correct.
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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 dis investment mainly to pay back the external debt.2. The government no longer intends to retain the management control of the CPSEs.Q.Which the correct statement given above is/are correct?a)1 only.b)2 only.c)Both 1 and 2.d)Neither 1 nor 2.Correct answer is option 'D'. Can you explain this answer?
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