When the disinvestment period started in public sector enterprises in India?

Question

Accepted Answer

The correct option is 3:

The disinvestment period in public sector enterprises (PSEs) in India officially started during the financial year 1991-92. This move was a crucial component of the broader economic reforms introduced in 1991, famously known as the Liberalization, Privatization, and Globalization (LPG) reforms. The primary objective of disinvestment was to reduce the fiscal burden on the government by liquidating a portion of its equity in loss-making or inefficient PSEs, raise resources for financing the fiscal deficit, and improve the efficiency and competitiveness of these enterprises by subjecting them to market discipline. The first tranche of disinvestment occurred in this financial year, marking the beginning of this policy shift.

The incorrect option is 1:
1989-90 was a period just preceding the major economic crisis and the subsequent reforms. While there may have been early discussions or minor asset sales, a formal, sustained disinvestment policy did not begin in this year.

The incorrect option is 2:
1990-91 was the year of the severe balance of payments crisis, which directly led to the 1991 economic reforms. While the need for drastic measures was recognized, the implementation of the disinvestment policy began only in the following financial year, 1991-92.

The incorrect option is 4:
1992-93 was the second year of the reform process. By this time, the disinvestment policy was already underway, having been initiated in the previous financial year, 1991-92. Therefore, it marks the continuation, not the start, of the disinvestment period.