Public Sector in Modern India | Public Administration Optional for UPSC (Notes) PDF Download

Introduction

Public Sector Undertakings (PSUs) in India are government-owned corporations that have played a significant role in the country's economic development and self-sustainability. With a majority stake held by the government, these entities have been instrumental in sectors such as transportation and energy, fostering industrial growth and addressing socio-economic challenges.

Evolution of PSUs in India

• Under British colonial rule, factories and enterprises were established primarily to serve the interests of the colonizers, resulting in no significant benefits for India.
• After gaining independence, India encountered socio-economic obstacles, including underdevelopment, income inequalities, unemployment, insufficiently skilled workforce, a weak industrial foundation, and inadequate infrastructure.
• In order to tackle these challenges, India adopted a Planned Economic Development model, drawing inspiration from the planned economic approaches employed by socialist nations. As a part of this model, the concept of Public Sector Undertakings (PSUs) was introduced.

Role of PSUs in India

• Nation-building focus: PSUs place greater emphasis on nation-building rather than profit-making, establishing a robust framework for industrial advancement.
• Government involvement: PSUs enable government intervention in the economy, facilitating efforts to fulfill socio-economic objectives and pursue long-term goals.
• Boosting agricultural economy: PSUs play a role in fostering the growth of the agricultural economy and promoting rural development.
• Provision of infrastructure and opportunities: PSUs are instrumental in providing essential infrastructure, educational resources, and employment prospects.

Public Sector in modern India

• Core and strategic industries: Initially, PSUs were established in sectors such as railways, coal and oil, heavy industries, and forest industries. Private investors were hesitant to invest in these areas due to high risks and lack of expertise.
• Nationalization and diversification: In the subsequent phase, industries were nationalized, struggling enterprises were taken over, and PSUs expanded into diverse sectors such as consumer goods, consultancy, contracting, and transportation.
• Industrial categorization: Industrial policies introduced a classification system categorizing industries into Schedule A (sole responsibility of the state), Schedule B (state-driven development with private involvement), and Schedule C (primarily private sector-driven).
• Shifting approaches: The Industrial Policy of 1991 brought about significant changes following the decline of the socialist model. It ushered in liberalization, privatization, globalization, and the adoption of New Public Management, Public Choice theory, and Public-Private Partnership practices.

Case Study 1: Indian Railways

Indian Railways, as a Public Sector Undertaking (PSU), holds immense importance in the transportation and infrastructure development of India. It is a government-owned entity and operates as a nationalized industry. The extensive railway network effectively links diverse regions, promoting trade and offering cost-effective transportation options for passengers. Indian Railways makes a substantial contribution to both the economic growth and social cohesion of the country.

Case Study 2: Oil and Natural Gas Corporation (ONGC)

ONGC, a Public Sector Undertaking (PSU) operating under the Ministry of Petroleum and Natural Gas, is entrusted with the crucial task of exploring and extracting oil and natural gas resources within India. ONGC's primary responsibility lies in ensuring the nation's energy security by contributing to domestic oil and gas production. Additionally, it actively engages in international ventures and collaborations to fulfill India's growing energy requirements.

The case studies exemplify the significant role played by Indian PSUs in sectors such as transportation and energy, actively contributing to the overall development and self-sufficiency of the nation.