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Definition: Disinvestment is the opposite of investment. When a government sells its share in a venture, it’s called disinvestment.
When you invest in an enterprise, you typically buy a share in it. Disinvestment is the opposite of it. The term disinvestment is typically used in the context of a government. When a government sells its share in a venture, it’s known as disinvestment. A government sells its share in a venture to raise money and to bring a private investor into that venture. In India, the government has sold its stake in ventures many times. It is believed that a government’s primary function is not to run a business. Hence, when a government runs a business, inefficiencies creep in due to bureaucracy and other issues. Businesses are mostly run for profit; however, a government’s objective is often not just to make a profit. Therefore, when a government is not able to run a venture well, it sells it to a private investor. This is called the process of disinvestment.
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