The action of a government selling or liquidating its stake in an asset or a public sector enterprise is called:

Disinvestment means that the government sells a part or all of its shares or assets in a public sector enterprise. When it sells only a part and still keeps majority control, it is called minority stake sale. When it sells a majority stake and hands over management control to a private buyer, it is called strategic disinvestment or privatisation.

Disinvestment began in India in 1991-92 as part of the economic reforms. The main aims are to raise money for the government, reduce the fiscal deficit, improve the efficiency of public sector units by bringing in private management and market discipline, and allow the government to focus on core areas such as health, education and infrastructure. Money from disinvestment is counted as a capital receipt in the Union Budget, because it reduces the government's assets.

A Disinvestment Commission was set up in 1996, and a separate Ministry of Disinvestment was created in 1999. Today, disinvestment is handled by the Department of Investment and Public Asset Management (DIPAM), under the Ministry of Finance. Well-known examples include the strategic sale of Air India to the Tata group in 2022 and the public offer of shares of the Life Insurance Corporation (LIC) in 2022, which was India's largest IPO at that time.

Why not the other options?

• ✗Nationalisation is the opposite of disinvestment; it means the government takes over private businesses, as in the nationalisation of 14 major banks in 1969.
• ✗Deregulation means removing government rules and controls on an industry.
• ✗Devaluation means officially lowering the value of a country's currency against other currencies.