SSC CHSL 2025 PYQ — Question 98

The correct answer is Option 1: Sale of shares in PSUs.

Explanation:

• Disinvestment simply refers to the sale of its assets or investments by the government. When the government sells its stake or shares in a Public Sector Undertaking (PSU) to the private sector or the general public, it is termed as PSU Disinvestment.
• Main Objectives: The primary goal of disinvestment is to reduce the financial burden on the government exchequer, channel public funds into other developmental activities (such as education and healthcare), and improve the operational efficiency of government-owned companies.
• Types: Disinvestment can be partial (Minority stake sale) or complete (Strategic disinvestment), wherein the government transfers both the management and control of the company into private hands (e.g., the privatization of Air India).
• Nodal Department: In India, the process of disinvestment is managed by DIPAM (Department of Investment and Public Asset Management), which functions under the Ministry of Finance.

Key Economic Terminology (Quick Revision):

• Privatization: When the government transfers both management and ownership to the private sector (selling a stake exceeding 51%).
• Strategic Sale: A form of disinvestment in which a significant stake—along with management control—is sold.
• Fiscal Deficit: The difference between the government's total revenue and its total expenditure. Proceeds from disinvestment are often utilized to reduce this deficit.

Important Questions for Upcoming Examinations:
Question: What is the full form of 'DIPAM', the department responsible for disinvestment in India?
Answer: Department of Investment and Public Asset Management.
Question: Into which fund are the proceeds generated from disinvestment deposited?
Answer: National Investment Fund (NIF).
Question: In which year was the disinvestment policy introduced in India? Answer: After the economic reforms of 1991 (LPG Policy).