Step 1: Understanding the Concept:
Disinvestment is a strategic economic policy where the government reduces its ownership or financial stake in Public Sector Undertakings (PSUs).
It is a key component of the Liberalisation, Privatisation, and Globalisation (LPG) reforms introduced in India in 1991.
Step 2: Detailed Explanation:
When the government "invests," it puts money into companies to build and run them. When it "disinvests," it sells its shares to the private sector or the general public.
Why does the government do this?
1. Fiscal Discipline: To raise funds for the government treasury to reduce the fiscal deficit.
2. Efficiency: Many public sector companies are loss-making or inefficient. Introducing private management or ownership often improves productivity.
3. Focus on Welfare: It allows the government to move out of non-essential businesses (like running hotels or airlines) and focus its resources on social sectors like health and education.
Privatisation is the ultimate form of disinvestment.
- If the government sells less than 50% of shares, it keeps control.
- If it sells more than 51% of shares (Strategic Disinvestment), the company effectively becomes a private entity.
Option (B) refers to Globalization.
Option (A) is the opposite of disinvestment (it's acquisition).
Option (C) is a personal banking term.
Step 3: Final Answer:
Disinvestment is specifically the process of the state withdrawing its capital from public sector companies, which facilitates privatization.
The correct option is (D).