LESSON 2 PUBLIC SECTOR ENTERPRISES IN INDI
Studying this chapter should enable you to understand: •
Meaning of Public Sector Enterprises PSES), • Rationale and Contribution of
PSEs in Indian Economy, • Performance of Indian PSEs. • Problems inflicting
PSTs. • Recent Government Initiatives for improving PSEs.
'Introduction
Public Sector Enterprises (PSEs) or State owned and managed
units have played a strategic role in the Indian economy. The key factors
contributing to stronghold of these enterprises are the need of rapid industrialization
with equitable distribution of economic wealth and inadequacies of free market.
India witnessed a greater degree of state ownership and increased regulation
since second plan that envisaged industrialization as a development strategy. By
1080s the poor performance of state-owned companies was acknowledged and
various efforts were made to improve performance. In an era of economic reform
process initiated since l99 I privatization has become a key component of
public sector policy of the ,government, The survival of PSEs now depends upon
performance efficiency and profitability.
Definition of Public
Sector Enterprises
Public Sector Enterprises often referred to as government
owned undertakings:!enterprises or state-owned enterprises are wholly or partly
owned and controlled by the government and produce marketable goods and
services i.e, PSEs includes industrial and commercial enterprises which are
managed and controlled ,y government. Public sector anti PSEs are different
from each other. The word public sector is wider and includes all kinds of
organisation commercial PSEs) and non-commercial that are owned partly or fully
and effectively managed by Government .'Thus government funded universities,
colleges, hospitals, schools are part of publie sector but not PSEs because
these organisations lack commercial orientation.
Rationale of Pses In
India
The policy rationale
for public ownership and government provision of certain goods and services has been based on the presence of some form
of market which are addressed through public ownership. In India, PSFs are assigned
the responsibility Of fulfilling social goals like correcting regional –and economic imbalances„providing employment and reducing
the concentration of monopoly power in the economy. Further, as a pre-requisite
for growth, the state controls the key sectors of the economy which is
popularly known thc commanding, heights' rationale .The rationale of PSI's in India is discussed as follow …
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