Some portions of the disinvestment proceeds should be used : 1. in t

Some portions of the disinvestment proceeds should be used :

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1. in the divested PSU itself for upgrading purposes
2. in the turn-around of the other PSUs
3. in the public debt repayment/ pre-payment
4. in the social infrastructure (education, healthcare, etc.)

Select the correct answer using the code given below :

1, 2 and 3 only

2, 3 and 4 only

1 and 4 only

1, 2, 3 and 4

Answer is Right!

Answer is Wrong!

This question was previously asked in

UPSC SO-Steno – 2018

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Disinvestment proceeds are typically used by the government for strategic purposes. Option 1, using proceeds to upgrade the *divested* PSU itself, is generally not the purpose; once a PSU is sold off, its investment needs are the responsibility of the new owners or the residual government holding. Options 2, 3, and 4 represent common and stated objectives for utilizing disinvestment proceeds in India. Funds are often used to turn around or restructure other loss-making or potentially viable PSUs, to reduce the national debt burden (by repayment/pre-payment), and to finance social sector programs and infrastructure development (education, healthcare, etc.) which otherwise might require increased taxation or borrowing.

Common uses of disinvestment proceeds include reducing government debt, funding social sector programs, and investing in other public sector enterprises.

The specific allocation of disinvestment proceeds is decided by the government based on its fiscal priorities. In recent years, the emphasis has often been on using the proceeds for infrastructure development and social sector schemes, besides covering the fiscal deficit or reducing debt. The National Investment Fund (NIF) was established to park disinvestment proceeds, initially intended for specific uses like investing in profitable and revivable PSUs or meeting social sector needs.

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