Critical reasoning – Disinvestment of profit-making public sector units (PSUs) Statement: Should all profit-making PSUs be sold to private companies? Arguments: I. Yes. Sale proceeds will augment government resources for development programmes. II. No. Private companies will not be able to run these units effectively. III. Yes. Service quality will improve significantly. IV. No. Employees will lose job security at all levels.

Introduction / Context:
The decision to privatize profit-making PSUs balances fiscal needs, efficiency, and social considerations. We evaluate each argument on relevance and general plausibility to policy choice.

Given Data / Assumptions:

• I claims disinvestment raises funds for development – a direct fiscal rationale.
• II alleges private companies cannot run the units effectively – a capability claim.
• III claims privatization improves service quality – an efficiency/consumer rationale.
• IV raises job-security concerns as a blanket statement across all levels.

Concept / Approach:
Strong arguments must link to fiscal prudence, efficiency, consumer interest, or labor impacts in a policy-relevant way. Overly absolute or speculative claims are weaker, but commonly in such reasoning tests, capability concerns (II) are still considered because they speak directly to feasibility.

Step-by-Step Solution:
I – Strong: Disinvestment can free capital for public investment; this is a standard rationale.II – Considered strong within test context: It directly questions feasibility and managerial capacity of private buyers; while debatable, it is a relevant caution.III – Strong: Private incentives and competition can improve service quality, a recognized argument for privatization.IV – Weaker: It is an absolute claim (“at all levels”) and is not determinative; protections or transitions may mitigate impacts. As framed, it is less persuasive.

Verification / Alternative check:
A robust analysis would compare sector-specific records and regulatory safeguards; the first three arguments capture key axes (fiscal, feasibility, quality).

Why Other Options Are Wrong:

• Only II & III or Only III & IV: Omit the strong fiscal case (I).
• All are strong / II, III & IV: Overstate the blanket job-security objection in IV.

Common Pitfalls:
Treating workforce impacts as universally fatal to policy rather than issues for transition planning.

Final Answer:
Only I, II and III are strong