The correct option is 1 and 3 only.
Explanation
Disinvestment refers to the sale of government equity in Public Sector Enterprises (PSEs) to the private sector. While the policy aims to improve efficiency and manage fiscal health, it has been subjected to scrutiny regarding the valuation of assets and the utilization of the generated revenue.
Statement-wise Analysis:
- Statement 1 is Correct: A primary criticism of the disinvestment policy is that the assets of PSEs have been undervalued and sold to the private sector. Critics argue that the sale price often does not reflect the true market value of the enterprise's assets, leading to accusations of selling public wealth at a discount.
- Statement 2 is Incorrect: The criticism regarding the use of proceeds is that they are not used for the development of PSEs or social infrastructure. Instead, the proceeds have largely been used to offset the fiscal deficit (shortage of government revenues) and manage the government's budget rather than creating new capital assets or strengthening the social sector.
- Statement 3 is Correct: Following from the undervaluation of assets (Statement 1), critics argue that the process has resulted in a substantial loss to the government and the public exchequer, as the state receives less than the potential value of the assets sold.
Key Takeaway:
The disinvestment policy is frequently criticized for the undervaluation of public assets and the utilization of proceeds for deficit financing (revenue expenditure) rather than for capital investment or social welfare.