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Evolution Of Public Sector Undertakings In India

Evolution Of Public Sector Undertakings In India


  • During the British Rule the presence of factories and enterprises was conspicuous,however they were mostly built and used for vested interests of colonialism and thus did little good to India and its people.
  • Post Independence due to the above as well as other factors, India was in deep socio-economic issues. There was grave underdevelopment,along with disparities in income,unemployment,lack of trained manpower and a weak industrial base and investments,unacceptable infrastructural facilities,etc.
  • Therefore in order to self sustain and become self reliant the Public Sector Undertaking blueprint was developed under Planned Economic Development model of Socialist countries that would address all the above problems.

Public Sector Reforms in India, 1991

  • The Statement on Industrial Policy, of 1991, reviewed the public sector in India and recognized many problems associated with the public enterprises and suggested ways to rectify these problems.
  • It clearly stated that many public enterprises have become a burden to the Government rather than an asset and proposed the Government to adopt a new approach for the public enterprises.
  • Accordingly, the public sector was reduced in many areas from the initial 17 to 6 areas. In manufacturing, the areas which continue to be reserved for the public sector are those related to strategic concerns, defence and petroleum.                        Evolution Of Public Sector Undertakings In India
  • Apart from that, the Government made no bar or restriction for participation of the private sector.
  • All effort was made through the change of management and financial help for reviving the public sector and making it competitive.
  • The decision of disinvestment of equity of the public sector enterprises was also proposed.

Role Of Public Sector Undertakings In India

  • PSUs have laid a strong foundation for the Industrial development of the country as it is not interested in profit making but nation building.
  • They leverage the government through major shareholding in the Industries to intervene in the economy in a major way thus helping in achieving the desired socio-economic objectives and long term goals.
  • They help in pushing the agricultural economy on to the progressive pathway and rural development as well as providing basic infrastructural facilities,educational and employment opportunities.





Public Administration by G.Rajput

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