UPSC Prelims Practice Questions — Disinvestment as key economic strategy

Q1. With reference to the ways in which the Union Government raises resources from public sector enterprises and public assets, consider the following statements: Which of the statements given above is/are correct?

  1. In a minority stake sale, the government's shareholding falls but it continues to exercise management control over the enterprise.
  2. What sets strategic disinvestment apart from a minority stake sale is the transfer of management control to the buyer.
  3. Strategic disinvestment and asset monetisation both result in the private party acquiring ownership of the asset concerned.
  • A. 2 and 3 only
  • B. 1 and 2 only
  • C. 1 only
  • D. 1, 2 and 3

Q2. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Proceeds from the sale of government equity in central public sector enterprises are classified as capital receipts in the Union Budget.
  2. A government receipt is classed as capital if it either creates a liability or reduces the government's assets, and a sale of equity reduces the government's assets.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q3. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Other things being equal, higher disinvestment receipts lower the Union Government's fiscal deficit.
  2. Disinvestment receipts are counted as revenue receipts because, unlike borrowings, they do not have to be repaid.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q4. Suppose that in a financial year the Union Government's disinvestment receipts fall well short of the budget estimate, while its expenditure and all other receipts turn out exactly as budgeted. Consider the following statements: Which of the statements given above is/are correct?

  1. The revenue deficit would rise above its budgeted level because of the shortfall.
  2. The fiscal deficit would exceed its budgeted level.
  3. The amount the government must finance through borrowing and other means of deficit financing would rise.
  • A. 3 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q5. With reference to the New Public Sector Enterprise Policy, 2021, consider the following statements: Which of the statements given above are correct?

  1. In strategic sectors, every existing public sector enterprise is to be retained under government control.
  2. In non-strategic sectors, CPSEs are to be privatised where feasible, and otherwise considered for closure.
  3. Considerations such as national security, energy security and critical infrastructure underlie the identification of strategic sectors.
  4. Enterprises in a strategic sector that are not retained may be merged with, or made subsidiaries of, another public sector enterprise.
  • A. 1, 3 and 4 only
  • B. 2 and 3 only
  • C. 1 and 2 only
  • D. 2, 3 and 4 only

Q6. Consider the following assertion: The Union Government's approval, in October 2026, of the sale of its stake in IDBI Bank is consistent with the New Public Sector Enterprise Policy, 2021. Which of the following statements support/supports the above assertion?

  1. Banking, insurance and financial services is a strategic sector in which entities beyond a bare minimum public presence are to be considered for privatisation, merger or closure.
  2. The policy classifies banking and financial services as a non-strategic sector, from which the government is to exit completely.
  3. The Budget 2021-22 announcement of the policy named IDBI Bank among the strategic disinvestment transactions to be completed.
  • A. 1 and 3 only
  • B. 2 and 3 only
  • C. 1, 2 and 3
  • D. 1 only

Q7. With reference to the National Monetisation Pipeline (NMP) launched in 2021, consider the following statements: Which of the statements given above is/are correct?

  1. Its estimate of monetisation potential was based on core infrastructure assets of the Central Government.
  2. Its estimate included the proceeds expected from strategic disinvestment of CPSEs.
  3. Its estimate covered surplus land and other non-core assets of the Central Government.
  • A. 1 only
  • B. 1, 2 and 3
  • C. 2 and 3 only
  • D. 1 and 2 only

Q8. Consider the following: The National Monetisation Pipeline launched in August 2021 estimated a monetisation potential of ₹6.0 lakh crore from core assets of the Central Government over FY2022 to FY2025. A 2024 official release reported that assets worth ₹3.85 lakh crore had been monetised in its first three years. In February 2026, a second phase (NMP 2.0) was launched with an estimated potential of ₹16.72 lakh crore over FY2026 to FY2030. Which of the following inferences can be drawn from the above?

  1. Assets worth ₹3.85 lakh crore passed into private ownership during the first three years.
  2. Realisation in the first three years was below an even, year-by-year share of the four-year estimate.
  3. The launch of a second phase shows that the government has given up disinvestment as a source of receipts.
  4. The second phase envisages a higher average annual monetisation than the first phase did.
  • A. 1 and 2 only
  • B. 1, 3 and 4 only
  • C. 2, 3 and 4 only
  • D. 2 and 4 only