Government companies can be converted into private companies in two ways. Which option gives these two ways?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Government withdrawing from its ownership and management, or selling it outright
Privatisation means the government sheds the ownership or management of its company. It can do so by pulling out of ownership and management, or by selling the company outright.
Option (1) Selling it outright, or granting it maharatna status with more autonomy — Incorrect. An outright sale is one of the two ways. But maharatna status only gives a PSE more autonomy; the company stays in the public sector.
Option (2) Dereserving the goods it makes, or abolishing industrial licensing for it — Incorrect. These are steps of deregulation of industry. They do not change who owns a company.
Option (3) Government withdrawing from its ownership and management, or letting it raise resources from financial markets — Incorrect. Withdrawal is one of the two ways. But PSEs raise resources from financial markets while the government retains them in the public sector.
Option (4) Government withdrawing from its ownership and management, or selling it outright — Correct. These are the two ways a government company becomes a private one.
NCERT (2026-27): “3.4 Privatisation It implies shedding of the ownership or management of a government owned enterprise. Government companies are converted into private companies in two ways “Box 3.1: Navratnas and Public Enterprise Policies … They were given greater financial, managerial and operational autonomy, in taking various decisions to run the company efficiently and thus increase their profits. …” “Box 3.1: Navratnas and Public Enterprise Policies … Of late, the government has decided to retain them in the public sector and enable them to expand themselves in the global markets and raise resources by themselves from financial markets.” |