Former Prime minister Pandit Jawaharlal Nehru described public sector enterprises (PSEs) as ‘temples of modern India’. He envisaged commanding heights of position for public sector enterprises in the Indian economy. For realizing this goal, PSEs were set up in core, basic, heavy , critical and strategic industries. India has adopted a mixed economy model that encourages the role of the public as well as private sector enterprises. Some of PSEs are making huge losses year after year even many years after their inception. For example , take the case of Air India. Government had to infuse, a whopping Rs 2000 crores as equity to keep the national carrier AIR INDIA afloat. Air India became public limited company in 1946 and is perhaps one of the very oldest companies in India. All the revival plan of Air India attempted earlier were not successful. Government aim should be to cut losses, and should not invest public money more in morage. The Cabinet approved Air India's Rs 30,000-crore financial restructuring plan, Spending Rs 30,000 crores of taxpayer money over a loss making air line is definitely not a prudent & welcome step. The Government argument is “If AI is not kept afloat, what will happen is airfares will go up, other airline companies will simply push up their air fares because so many seats will not be available. Which is why we are providing Rs 2,000 crore to AI,” Chidambaram said. Let us analyse the overall viability of PSUs in this context. Some important objectives of PSUs are to create
infrastructure, absorb technology, encourage innovation, generate employment and achieve certain social objectives.
Take the example of Maruti Suzuki India Ltd in this context.
If we go through the car market, today, we have some morethan 100 odd models to choose and there is no dearth of choice. But , a little over a three decades ago, it was a different story....