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 disinvestment mainly to pay back the external debt. 2. The Government no longer intends to retain the management control of the CPSEs. Which of the statements given above is/ are correct?

The Government of India's disinvestment policy is not primarily aimed at paying back external debt, nor does it intend to universally relinquish management control. Statement 1 is incorrect because disinvestment proceeds are primarily used to finance social sector and developmental programs, bridge the fiscal deficit, and fund infrastructure projects [2]. While proceeds can help manage public debt generally, they are not specifically earmarked 'mainly' for external debt repayment. Statement 2 is incorrect because the government distinguishes between minority stake sales and strategic disinvestment. In minority sales, the government explicitly retains majority shareholding (at least 51%) and management control [3]. Management control is only transferred during 'strategic disinvestment' or 'privatization' [2]. Since the government continues to pursue minority sales as a common method, it cannot be said that it 'no longer intends' to retain control.

Sources

1. [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > Objectives > p. 106
2. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 2.26 Strategic Disinvestment > p. 104
3. [3] https://cag.gov.in/uploads/download_audit_report/2020/CHAPTER%20III-061c1ab81b47ce6.63330903.pdf