Practicing Success
Sale of shares in public sector undertaking to private sector : |
Increase assets of government. Increase in liabilities of government. Decrease in liabilities of government Decreases assets of government |
Decreases assets of government |
The correct answer is option (4) : Decreases assets of government When the government sells shares of a PSU to the private sector, it is essentially giving up ownership (or a portion of ownership) of that asset. This sale translates to a decrease in the government's assets (the PSU) and an increase in its cash holdings (the proceeds from the sale). |