Public Sector

Different types of Public Enterprises 1. CPSEs (Central Public Sector Enterprises) – Companies where the direct holding of the Central Government or of other CPSEs is 51% or more 2. PSBs (Public Sector Banks) – Banks where the direct holding of the Central/State Government or other PSBs is 51% or more 3. SLPEs (State Level Public Enterprises) – Companies where the direct holding of the State Government or other SLPEs is 51% or more

Background and History In 1947, when India became independent, there were various socio-economic problems confronting the country which needed to be dealt with in a planned and systematic manner. India at that time was primarily an agrarian economy with a weak industrial base, low level of savings, inadequate investments and lack of infrastructure facilities. There existed considerable inequalities in income and levels of employment, glaring regional imbalances in economic development and lack of trained manpower. As such, the State’s intervention in all the sectors of the economy was desirable and inevitable since private sector neither had the resources, managerial and scientific skill, nor the will to undertake the risks associated with large, long-gestation investments.  Among the imperatives before the Government at that time were: • Rapid economic development and industrialisation of the country and creating the necessary infrastructure for economic development • Removal of poverty and equitable distribution of income. Wider ownership of economic manpower to prevent its concentration in a few hands • Generation of employment opportunities • Removal of regional imbalances • Accelerated growth of agricultural and industrial production • Better utilisation of natural resources  • Assist the development of small scale and ancillary industries • Promote import substitutions • Save and earn foreign exchange for the economy Given the type and range of problems faced by the country on the economic, social and strategic fronts, it became a pragmatic compulsion to use the public sector as an instrument for self-reliant economic growth. The dominant consideration for the continued large investments in public sector enterprises was to accelerate the growth of core sectors of economy; to serve the equipment needs of strategically important sectors like Railways, Telecommunications, Nuclear Power, Defense etc. and to provide a springboard for the economy to achieve a significant degree of self-sufficiency in the critical sectors. The rationale for setting up public enterprises was to ensure easier availability of vital articles of mass consumption, to introduce checks on prices of important products, help promote emerging areas like tourism, etc. A large number of enterprises were created out of "Sick Units" taken over from the private sector inter alia, to protect the interests of the workers. A number of public enterprises were created to operate in national and international trade, consultancy, contract and construction services, inland and overseas communications, etc. The overall constitution of public sector enterprises in India is, thus, a heterogeneous conglomeration of basic and infrastructure industries, industries producing consumer goods, industries engaged in trade and services etc.

Product Profile Public sector enterprises offer a wide range of products and services which include:      •  Manufacturing of           •  steel          •  heavy machinery          •  machine tools          •  instruments          •  heavy machine building equipment          •  heavy electrical equipment for thermal and hydel stations          •  transportation equipment          •  telecommunication equipment          •  ships and sub-marines          •  fertilizers          •  drugs and pharmaceuticals          •  petrochemicals          •  cement          •  textile     •  mining of coal and minerals     •  extraction and refining of crude oil     •  operation of air, sea, river and road transport     •  national and international trade     •  consultancy     •  contract and construction services     •  inland and overseas telecommunication services     •  financial services     •  consumer items such as newsprint, paper and contraceptives     •  hotel and tourism services As of 31st March 2008, there were as many as 242 CPSEs (excluding 7 insurance companies). The number of profit making CPSEs has increased steadily from 143 CPSEs in 2004-05 to 159 CPSEs in 2007-08 with a total profit of Rs. 91,083 crore. (Source: Public Enterprise Survey 2007-08)