Public Sector in India

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Overview of Central Public Sector Enterprises

The government-owned corporations play a pivotal role in the economic development of emerging economies because their participation is higher in the industrial and commercial activities of these economies. Resource constraints and limited scope of the private sector in the early stages of development and planning have set the stage for predominance of the public enterprises in these economies. Thus, public sectors in the leading developing countries of the world (including the countries in the BRIC region) play a very important role.

Investments in public sector enterprises have also been greater and have continued to accelerate growth in core sectors of a developing economy (such as railways, telecommunications, nuclear power, defence etc). Many a times, public enterprises were created to operate in areas of national and international trade, consultancy, inland, and overseas communication and construction services; as a result, overall profits of the public sector have not been restricted to certain sectors. In other words, the public sector is a heterogeneous combination of basic infrastructure industries, industries engaged in providing trade services, consumer goods industries, et al.

Rapid industrialisation and infrastructure creation for economic development were the basic rationale behind setting up public enterprises. Governed by this rationale, the public enterprises were set up by the government to ensure easy availability of important articles of mass consumption, and to promote even distribution of income while keeping tabs on prices of vital products. Protection of workers’ interests was also one of the objectives as large number of enterprises was created from sick private sector enterprises (PSE) that were taken over. Promoting and ensuring that regions were developed in a balanced manner and earning foreign exchange by promoting import substitutions were some additional reasons for encouraging public

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