Disinvestment means sale or liquidation of assets by the government, usually Central and state public sector enterprises, projects, or other fixed assets.
All disinvestment is privatisation.
Which of the statements given above is/are correct?
Correct Answer:
(A) 1 only
Disinvestment means sale or liquidation of assets by the government, usually Central and state public sector enterprises, projects, or other fixed assets.
In some cases, disinvestment may be done to privatise assets. However, not all disinvestment is privatisation.
In complete privatisation, 100% control of the company is passed on to the buyer.
Ques: 2
Consider the following statements:
The term ‘disinvestment’ was used first time in Interim Budget 1991.
Disinvestment in India began in 2001-02.
Which of the statements given above is/are correct?
Correct Answer:
(A) 1 only
Disinvestment in India began in 1991-92 when 31 selected PSUs were disinvested for Rs. 3,038 crores.
The term ‘disinvestment’ was used first time in Interim Budget 1991.
Later, Rangarajan committee, in 1993, emphasised the need for substantial disinvestment.
Ques: 3
Consider the following statements:
Department of Disinvestments was created in 1993.
Department of Investments and Public Asset Management (DIPAM) acts as a nodal department for disinvestment.
Which of the statements given above is/are correct?
Correct Answer:
(B) 2 only
The policy on disinvestment gathered steam, when a new Department of Disinvestment was created in 1999, which became a full Ministry in 2001.
Ministry of Disinvestment was formed in 2001
But in 2004, the ministry was shut down and was merged in the Finance ministry as an independent department.
Later, the Department of Disinvestments was renamed as Department of Investments and Public Asset Management (DIPAM) in 2016.
Now, DIPAM acts as a nodal department for disinvestment.
Ques: 4
Consider the following pairs:
Further Public Offering (FPO) - Offer of shares by a listed Public Sector Enterprise (PSE) or the Government to the public for subscription.
Institutional Placement Program (IPP) - Offer of shares by an unlisted Public Sector Enterprise (PSE) or the Government to the public for subscription for the first time.
Which of the following pairs is/are correctly matched:
Correct Answer:
(A) 1 only
Initial Public Offering (IPO) - Offer of shares by an unlisted Public Sector Enterprise (PSE) or the Government to the public for subscription for the first time.
Further Public Offering (FPO) - Offer of shares by a listed Public Sector Enterprise (PSE) or the Government to the public for subscription.
Offer for Sale (OFS) - Auction of shares by promoters through the Stock Exchange platform. This method has been extensively used by the Government since 2012.
Strategic Sale - Sale of a substantial portion of Government shareholding (up to 50% or as determined) of a PSE along with transfer of management control.
Institutional Placement Program (IPP) - Offering where only Qualified Institutional Buyers can participate. These buyers are perceived to possess the expertise to invest in capital markets.
CPSE Exchange Traded Fund (ETF) - Disinvestment through the ETF route allows the simultaneous sale of the Government’s stake in various PSEs across diverse sectors through a single offering.
Ques: 5
Consider the following pairs:
Minority Disinvestment: The government retains a majority in the company, typically greater than 51%, thus ensuring management control.
Majority Divestment: 100% control of the company is passed on to the buyer.
Which of the pairs given above is/are correct?
Correct Answer:
(A) 1 only
Minority Disinvestment: The government retains a majority in the company, typically greater than 51%, thus ensuring management control.
Majority Divestment: The government hands over control to the acquiring entity but retains some stake.
Complete Privatisation: 100% control of the company is passed on to the buyer.