Question

Difference between privatisation and disinvestment

Answer 1

Privatization is the process of transferring the ownership of a business of a public sector to the private sector. In a broader sense, privatization refers to transfer of any government function to the private sector including governmental functions like revenue collection and law enforcement.

Divestment is said as the opposite of Investment. Investment means acquisition of certain assets; divestment means the release of assets. A business may be that a particular arm of its is not compatible with its core business and hence may decide to shelve or divest this business. Divestment may be done for various economic or social reasons.

Answer 2

Privatization and Disinvestment

Explanation:

When the ownership of a public sector firm is partially or fully transferred to a private entity, it is called privatization. In general, it is used to denote transfer of any government function like railway, telephone, law enforcement, etc. to the private sector.

Disinvestment means to selling off a part of the business for want of cash or if that part of the business does not comply with the future plans of the company. A company, public or private, can decide to sell only of its manufacturing units, or a business division, or a subsidiary, or a product line.