Which of the following statement s about disinvestments is are correct 1 Disinvestment refers to the...........

Economic Affairs Public Sector Enterprises

Which of the following statement/s about disinvestments is/are correct?

1. Disinvestment refers to the sale of shares/assets held by government in Public Sector Enterprises (PSEs).

2. Strategic disinvestment is one where along with assets/shares, the management control of the PSE is also transferred to a private entity.

3. The proceeds from the disinvestments are transferred to National Investment and Infrastructure Fund (NIIF).

Select the correct answer using codes given below

1 and 2 only

2 and 3 only

1 and 3 only

All of the above

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Explanation:

- Statement 1: Correct. Disinvestment involves the sale of shares or assets held by the government in Public Sector Enterprises (PSEs). This is done to raise funds and improve public finances.

- Statement 2: Correct. Strategic disinvestment occurs when the government not only sells shares or assets but also transfers management control of the PSE to a private entity. This results in a shift of ownership and operational responsibilities from public to private sector, thereby aiming for efficiency and better management.

- Statement 3: Incorrect. Proceeds from disinvestment typically go to the government's Consolidated Fund, not directly to the National Investment and Infrastructure Fund (NIIF). However, funds might be allocated to NIIF separately as part of government budgeting processes.

- Correct Answer: Option 1: 1 and 2 only, since both statements 1 and 2 are correct while statement 3 is not.