Q. Which of the following is/are the benefits of disinvestment?
1.Bridge the revenue shortfall for that year.
2.Help government to invest in social sector programmes.
3.Encourage private ownership of assets.
Select the correct answer from the codes given below;

[A] .1 and 2 only

[B] .2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: D

The government may disinvest in order to a) reduce the fiscal burden or bridge the revenue shortfall for that year, b) finance the fiscal deficit, c) invest in the economy and development or social sector programmes, d) reduce government debt, e) encourage private ownership of assets and trading in the open market.

If disinvestment is successful, it also means that the government does not have to fund the losses of a loss-making unit anymore.

Source: Explained | The status and proceeds of disinvestment