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Public Sector Undertaking (PSU) Disinvestment

PYQs

12

Articles

2

Momentum

31

Phase IFoundation

Background

Overview

Disinvestment is a recurring and significant aspect of India's economic policy, impacting public finance, capital markets, and the overall role of the state in the economy. It is frequently discussed in budget documents and economic surveys.

Public Sector Undertaking (PSU) Disinvestment refers to the process by which the government sells its equity stake in state-owned enterprises. It is a key fiscal policy tool aimed at raising revenue, reducing the fiscal deficit, improving efficiency, and promoting market competition.

Phase IIStatic core

Facts & tables

Key facts

Objective

Revenue generation, fiscal deficit reduction, efficiency improvement, market development.

Methods

Initial Public Offering (IPO), Offer for Sale (OFS), Strategic Sale, Buyback.

Nodal Agency

Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance.

Impact

Can lead to better corporate governance, increased market valuation, and resource reallocation.

Key Feature

Involves transfer of management control to the private entity.

Fiscal Impact

Proceeds contribute to non-debt capital receipts for the government.

Reference table

Static syllabus anchors

TypeReference
Conceptual areaIndian Economy

Reference table

Institutions & roles

BodyRole
Department of Investment and Public Asset Management (DIPAM)Implements
Ministry of FinanceOversees
Ministry of Finance (Department of Investment and Public Asset Management - DIPAM)Formulates and implements
Cabinet Committee on Economic Affairs (CCEA)Approves
Phase IIIExam lens

Prelims angle

Overview

Prelims angle: Purpose or function of a policy tool

Prelims angle: Factual recall

Quick revision

  • Sale of government equity in PSUs.
  • Aims: revenue, deficit reduction, efficiency.
  • Methods: IPO, OFS, strategic sale.
  • DIPAM is the nodal agency.
  • Key fiscal policy tool.

Elimination traps

Constitutional vs statutory — DIPAM is an executive body under the Ministry of Finance, not a constitutional or statutory body established by an act of Parliament.

Check if created by Constitution or by Parliament.

High-confidence PYQs

2026Purpose or function of a policy tool, Factual recall

The artificially fixed rupee-sterling exchange rate prescribed by the Hilton-Young Commission (1926) was adopted by the British Government for which one of t...

Modern HistoryOpen question
2025Conceptual understanding, Terminology-based question

Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings ...

EconomyOpen question

A country’s fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country’s interest liabil...

EconomyOpen question
2025Conceptual understanding, Application of economic principles

Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings ...

EconomyOpen question

A country’s fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country’s interest liabil...

EconomyOpen question
2024Statement-based questions, Conceptual understanding

Consider the following statements: Statement-I: If the United States of America (USA) were to default on its debt, holders of US Treasury Bonds will not be ...

EconomyOpen question
2019Conceptual understanding, Multi-statement analysis

In the context of India, which of the following factors is/are contributor/contributors to reducing the risk of a currency crisis? 1. The foreign currency e...

EconomyOpen question
2018Multi-statement analysis, Factual recall

Consider the following statements 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 6...

EconomyOpen question

If a commodity is provided free to the public by the Government, then

EconomyOpen question
2018Conceptual understanding, Application of economic principles

Consider the following statements 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 6...

EconomyOpen question

If a commodity is provided free to the public by the Government, then

EconomyOpen question
2016Purpose or function of a policy tool, Factual recall

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. R...

EconomyOpen question

Which one of the following is a purpose of ‘UDAY’, a scheme of the Government?

EconomyOpen question
2016Multi-statement analysis, Conceptual understanding

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. R...

EconomyOpen question

Which one of the following is a purpose of ‘UDAY’, a scheme of the Government?

EconomyOpen question
2015Conceptual understanding, Policy measures

There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit? 1. Reducing ...

EconomyOpen question

With reference to Indian economy, consider the following : 1. Bank rate 2. Open market operations 3. Public debt 4. Public revenue Which of the above is/are...

EconomyOpen question
2015Conceptual understanding, Multi-statement analysis

There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit? 1. Reducing ...

EconomyOpen question

With reference to Indian economy, consider the following : 1. Bank rate 2. Open market operations 3. Public debt 4. Public revenue Which of the above is/are...

EconomyOpen question
2013Purpose or function of a policy tool, Conceptual understanding

In India, deficit financing is used for raising resources for

EconomyOpen question

Topic timeline

Indian Economy
Prelims 2013· Purpose or function of a policy tool, Conceptual understanding

In India, deficit financing is used for raising resources for

Open question
Prelims 2015· Conceptual understanding, Policy measures

There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit? 1. Reducing ...

Open question

With reference to Indian economy, consider the following : 1. Bank rate 2. Open market operations 3. Public debt 4. Public revenue Which of the above is/are...

Open question
Prelims 2015· Conceptual understanding, Multi-statement analysis

There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit? 1. Reducing ...

Open question

With reference to Indian economy, consider the following : 1. Bank rate 2. Open market operations 3. Public debt 4. Public revenue Which of the above is/are...

Open question
Prelims 2016· Purpose or function of a policy tool, Factual recall

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. R...

Open question

Which one of the following is a purpose of ‘UDAY’, a scheme of the Government?

Open question
Prelims 2016· Multi-statement analysis, Conceptual understanding

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. R...

Open question

Which one of the following is a purpose of ‘UDAY’, a scheme of the Government?

Open question
Prelims 2018· Multi-statement analysis, Factual recall

Consider the following statements 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 6...

Open question

If a commodity is provided free to the public by the Government, then

Open question
Prelims 2018· Conceptual understanding, Application of economic principles

Consider the following statements 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 6...

Open question

If a commodity is provided free to the public by the Government, then

Open question
Prelims 2019· Conceptual understanding, Multi-statement analysis

In the context of India, which of the following factors is/are contributor/contributors to reducing the risk of a currency crisis? 1. The foreign currency e...

Open question
Prelims 2024· Statement-based questions, Conceptual understanding

Consider the following statements: Statement-I: If the United States of America (USA) were to default on its debt, holders of US Treasury Bonds will not be ...

Open question
Prelims 2025· Conceptual understanding, Terminology-based question

Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings ...

Open question

A country’s fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country’s interest liabil...

Open question
Prelims 2025· Conceptual understanding, Application of economic principles

Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings ...

Open question

A country’s fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country’s interest liabil...

Open question
Prelims 2026· Purpose or function of a policy tool, Factual recall

The artificially fixed rupee-sterling exchange rate prescribed by the Hilton-Young Commission (1926) was adopted by the British Government for which one of t...

Open question

Govt to sell up to 6.5% in LIC at ₹382/share; to add ₹31k crore to disinvestment kitty

04 Aug 2026 · Government selling its stake in PSUs to raise funds, reduce debt, and enhance efficiency, managed by DIPAM.

Read article

Govt evaluating financial bids for IDBI Bank strategic sale: Sources

26 Sep 2026 · Strategic disinvestment is a government policy to sell a majority stake, including management control, in PSUs to private players, aiming for efficiency and revenue generation.

Read article

Related topics

Current topic

Public Sector Undertaking (PSU) Disinvestment

Practice writing on this topic

UPSC has asked 12 linked questions on Public Sector Undertaking (PSU) Disinvestment in Mains. Write an answer to one — and get it evaluated.

See Mains PYQsEvaluate an answer

UPSC Prelims PYQs on Public Sector Undertaking (PSU) Disinvestment

Practice official previous year questions asked by UPSC related to this concept.

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. R...

2016·Economy
Solve

Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings ...

2025·Economy
Solve

There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit? 1. Reducing ...

2015·Economy
Solve

Which one of the following is a purpose of ‘UDAY’, a scheme of the Government?

2016·Economy
Solve

In India, deficit financing is used for raising resources for

2013·Economy
Solve

The artificially fixed rupee-sterling exchange rate prescribed by the Hilton-Young Commission (1926) was adopted by the British Government for which one of t...

2026·Modern History
Solve

In the context of India, which of the following factors is/are contributor/contributors to reducing the risk of a currency crisis? 1. The foreign currency e...

2019·Economy
Solve

Consider the following statements 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 6...

2018·Economy
Solve

Consider the following statements: Statement-I: If the United States of America (USA) were to default on its debt, holders of US Treasury Bonds will not be ...

2024·Economy
Solve

If a commodity is provided free to the public by the Government, then

2018·Economy
Solve

With reference to Indian economy, consider the following : 1. Bank rate 2. Open market operations 3. Public debt 4. Public revenue Which of the above is/are...

2015·Economy
Solve

A country’s fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country’s interest liabil...

2025·Economy
Solve

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