Q.What is meant by privatisation? Distinguish between disinvestment and strategic sale as forms of privatisation.

Privatisation is the transfer of ownership or management of a public-sector enterprise to the private sector, done mainly through disinvestment or strategic sale.

Privatisation refers to the transfer of ownership, management or control of a public-sector enterprise (PSU), wholly or partly, from the government to the private sector. The underlying rationale is that private, profit-driven management operating under market competition tends to use resources more efficiently than a government monopoly shielded from competitive pressure.

Disinvestment means the government sells a part of its shareholding in a PSU to private investors and the general public, typically through the stock market. The government usually continues to hold a majority stake and retains overall management control; the main purposes are to raise resources for the government and to widen public shareholding, without necessarily changing who runs the company day-to-day.

Strategic sale, by contrast, involves selling a substantial part of the government's stake — along with actual management control — to a private buyer (often a specific identified company through a competitive bidding process). Here, unlike ordinary disinvestment, the private buyer takes over operational decision-making, not just a financial shareholding.

In short, disinvestment is primarily a financial transaction that may leave government control intact, while strategic sale is a genuine transfer of both ownership and control to a private entity.

Treating disinvestment and strategic sale as identical — the key distinguishing point examiners look for is whether MANAGEMENT CONTROL changes hands, not just whether shares are sold.