Does the government invest in stocks, and if so, how does this happen in India?

Yes, the government does invest in the stock market, but not in the same way as individual investors. In India, the government often participates in the stock market through large institutions it controls, such as the Life Insurance Corporation (LIC) and various public sector enterprises (PSUs). These organizations are used to stabilize markets, provide liquidity, or help the government achieve specific economic goals, such as raising funds through disinvestment.

In addition to owning shares in public enterprises, the government occasionally holds stakes in private companies, either through direct investment or public sector mutual funds. However, unlike individual investors seeking profit, government investments often have broader economic implications, such as controlling inflation or managing public resources. While some critics argue that the government should avoid market involvement to ensure a level playing field, proponents believe these actions help safeguard the economy.

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