PSU Full Form

PSU, which stands for Public Sector Undertaking, or public Sector Unit, is also known as Public Sector Enterprise (PSE). In India, it is an entity of the government, which can be an enterprise owned by the government, a company owned by the government, a statutory corporation, or a nationalised company. These can be either partly or entirely owned by the Indian government or territorial or state governments. The Indian government partly or entirely owns the CPSU or CPSE, which stands for Central Public Sector Undertakings. On the other hand, the territorial or state governments of India own partly or wholly SLPSU or SLPSE, which stands for State Level Public Sector Undertakings.

History of Public Sector Undertaking

Even after the independence of India, it was still an agrarian entity that had a very weak industrial base. Eighteen states only owned the Indian ordnance factories in the entire country. And during the British Raj, it was elected that all agricultural production was to be left to the private sector, including jute mills, the processing firms, railways, banks, steel mills, coal mines, and electricity utilities. These were only some of the large economic entities that were owned by private sector industrialists. 

Once India gained independence, there was a consensus in favour of the industrialisation of the Indian economy. This process was taken as a primary stage toward developing the Indian economy, improving living standards, and achieving economic sovereignty. In 1948, the first industrial policy resolution was announced, and following this, in 1915, the Cabinet resolution formed the planning commission and as a result of which, in 1951, the Industrial act was enacted. The Industrial (Development and Regulation) Act had the major objective of bringing power to the government in order to take steps which were necessary to regulate the industry. 

Jawaharlal Nehru was the first prime minister of India, who promoted a major economic policy which was based on the industrialisation of import substitution. He always believed that one of the fundamental things to develop the Indian economy was to establish basic and also heavy industries. The second five-year plan of India, which was from 1956 to 1960, along with the industrial policy resolution of the year 1956, both emphasised the development of Indian public sector enterprises. This was in order to meet the industrialisation policy of Jawaharlal Nehru. 

The divisions that Nehru had were carried forward by a person known as the father of public sector undertakings in India, who was Dr V.Krishnamurthy. Until the Indian economic crisis that occurred in 1991, the industrial policy, which was led by the government along with restrictions on private enterprises, was among the dominant things that helped in the economic development of the country. Once the crisis happened, the government started divesting the ownership of many PSUs in order to privatise companies and raise capital.

Classification of Public Sector Undertakings in India

In India, the public sector undertakings or public sector units are classified into three parts.

• Central Public sector Enterprises (CPSE/CPSU)
• Public sector banks (PSB)
• State-level public enterprises (SLPE/SLPU)

Out of these three, the Ministry of heavy industries and Public Enterprises administers the Central Public sector Enterprises. As per the latest report for October 2021, there are around 14 Navratnas, 73 Miniratnas, and 10 Maharatnas CPSUs. Currently, the Nationalised Banks in India are 12 in number. 

Conclusion

Consequently, the public sector undertaking (PSU), also termed a public sector unit is essentially established to have enterprises under the government, either central, territorial, or state. These corporations, which are handled by the government, include Railways, Centers, defence Commissions, Banks, and others. It was established to develop the economy of the country along with the thought of bringing industrialisation to the country.