Privatisation can be partial, involving minority shareholding by the private sector. What is the government's shareholding threshold in a PSU for it to be considered privatised?​

Correct option is D

The correct answer is (d) Less than 51%.

• For a Public Sector Undertaking (PSU) to be considered privatized, the government must reduce its shareholding to less than 51%.

• This allows the private sector to take a controlling interest in the company, thereby making the PSU more market-driven and efficient.

• Privatization involves the transfer of ownership, and once the government holds less than 51%, the control of the company generally shifts to private shareholders.

Information Booster:

• In partial privatization, the government often sells a minority stake (less than 51%) to private players while retaining some level of control or influence over the PSU.

• The threshold of less than 51% is important because once the government’s stake falls below this level, it no longer holds a majority stake and, thus, control of the company.

• The process of privatization is intended to reduce the fiscal burden on the government and increase the operational efficiency of PSUs through private sector management practices.