In the context of Privatisation, what is the meaning of total decentralisation?
Show answer & explanation
Correct answer: A
Explanation
Correct Answer: Option 1: It means transferring 100% of the ownership of a public enterprise to the private sector.
Explanation:
In the context of privatization, full privatization (Full Privatization/Denationalization) means when the government transfers complete (100%) ownership and control of a public sector undertaking (PSU) to private hands. This is the most extreme form of privatization, where the state no longer holds any stake in that entity.
Additional Facts:
Partial Privatization: When the government sells less than a 51% stake and retains control.
Disinvestment: Selling a portion of a public enterprise's equity to the public or private sector.
Strategic Privatization: When the government transfers a 51% or more stake, along with management control, to the private sector.
Possible Questions for the Upcoming Exam:
In which year did the privatization process begin in India under the New Economic Policy (LPG)? (Answer: 1991) Which companies are awarded 'Navratna' and 'Maharatna' status?
(Answer: Select public sector companies based on performance).
What is the government primarily using the funds from disinvestment for?
(Answer: Reducing the fiscal deficit and developing social infrastructure).