Public FinancePYQ - Nov 2020 (Inter)Question 135 of 20
All Questions

Disinvestment refers to:

Options

ASelling of government shares in PSUs
BBuying of shares by government
CInvestment in foreign countries
DPrinting of new currency
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Correct Answer

✅ Option a — Selling of government shares in PSUs

All Options:

  • ASelling of government shares in PSUs
  • BBuying of shares by government
  • CInvestment in foreign countries
  • DPrinting of new currency

Detailed Solution & Explanation

To understand disinvestment, let's break it down: • Disinvestment is a process where the government sells its shares or assets in public sector undertakings (PSUs) or other entities. • This concept is often used to reduce the government's stake in various sectors, allowing private players to participate and increasing efficiency. • The main goal of disinvestment is to generate revenue for the government, which can be used for various purposes such as reducing debt or funding development projects. The correct answer is right because it aligns with the definition of disinvestment, which involves the sale of government shares in PSUs. Some options are incorrect because: • Buying of shares by government is the opposite of disinvestment, as it involves increasing the government's stake rather than reducing it. • Printing of new currency is related to monetary policy and is not directly related to the concept of disinvestment, which involves the sale of assets or shares.

About This Chapter: Public Finance

Paper

Paper 4: Business Economics

Weightage

10%

Key Topics

Fiscal Policy, Budget, Market Failure

This chapter deals with government finances — how the government earns (taxation) and spends (expenditure) money. Key topics include Fiscal Policy, types of taxes (Direct and Indirect), the Union Budget, Public Debt, and the concept of Market Failure and how government intervention corrects it.

View Official ICAI Syllabus

Exam Strategy Tip

Focus on the difference between Revenue and Capital items in the budget. Understand Fiscal Deficit and its implications. Tax-related MCQs are commonly asked.

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