Question : Statement 1: Privatization of public enterprises aimed to improve their efficiency and profitability.
Statement 2: Disinvestment refers to the acquisition of government-owned enterprises by the private sector.
Option 1: Both statements are true.
Option 2: Both statements are false.
Option 3: Statement 1 is true, and statement 2 is false.
Option 4: Statement 1 is false, and statement 2 is true.
Correct Answer: Statement 1 is true, and statement 2 is false.
Solution : The correct answer is (c) Statement 1 is true, and statement 2 is false.
Statement 1 is true. Privatization can lead to improved efficiency and profitability of public enterprises by subjecting them to market competition and private sector management practices. For example, when a public enterprise is privatized, it is more likely to be subject to market forces, such as competition from other companies. This can lead to the enterprise becoming more efficient in order to compete. Additionally, when a public enterprise is privatized, it is more likely to be managed by private sector managers who are more focused on profitability. This can also lead to the enterprise becoming more profitable.
Statement 2 is false. Disinvestment refers to the sale of government-owned assets, such as shares in a company or land. It does not necessarily mean that the government is selling its entire stake in an enterprise. For example, the government could sell a minority stake in an enterprise while still retaining a majority stake. In this case, the government would still own the enterprise and would not have been acquired by the private sector.
