Public Sector Enterprises

Public Sector Enterprises 

Public Sector Enterprises are a significant part of the Indian economy which comprises the public services and enterprises. An organisation owned by the government is called a public sector enterprise. This organisation can be a corporation, statutory corporation or a nationalised bank. The people that work in these organisations are government employees.  

The organisations owned and managed by the government are known as Public Sector Enterprises or Public Sector Undertakings. It can be held either by the Central Government or one state government. 

In India, there are 365 public sector undertakings. Some of these PSUs come under the control of some of the ministers of the Parliament, like the Railways. 

In this article, you will learn and understand the meaning of Public Sector Enterprises in the country. Additionally, you will understand their role in the economy and public sector enterprises examples. 

Public Enterprises Meaning 

Public Sector Enterprises are an essential part of the Indian economy. These consist of public services and enterprises that benefit all India’s citizens. The public sector enterprises are businesses owned and controlled by the government. 

The government either wholly or partially owns the enterprises. These enterprises help the government participate in the economic activities of the country. The Central or the state governments can manage public Sector Undertakings. When managed by the state government, it is known as the Central Public Sector undertaking. However, when owned and operated by a state, it is known as the state-level public sector undertakings. 

Classification Of Public Sector Enterprises 

In the PSU’s there are three main sectors, which are:

1. Departmental Undertakings: These are organised, financed and controlled by the government. The department is under the control of a minister from the Parliament. Some examples of departmental undertaking are the Indian Railways and Indian Post. 
2. Non-Departmental Undertakings: These are government companies and subsidiaries of the government. Additionally, these refer to statutory companies set up under special enactments of the Parliament and State Legislature. A few examples of non-departmental undertakings are Oil and Gas Corporations and Road Transport Corporations. 
3. Financial Institutions: These are enterprises like commercial banks, investment banks and brokerage firms. Examples of financial institutions are the State Bank of India and Unit Trust of India. 

Objectives Of Public Sector Enterprises 

The main objective of the public sector enterprise is to help the benefit of the citizens. However, besides that, there are other objectives of a public sector enterprise, like: 

1. It helps in creating an industrial base in the country. 
2. PSU’s help in generating a better quality of employment.
3. They develop the basic foundation in the country. 
4. Public Sector Enterprises helps in providing resources to the government. 
5. They help reduce inequalities and accelerate the country’s economic growth and development.

Role Of Public Sector Enterprises 

The public sector enterprises play a significant role in the upliftment of the country’s economic conditions. Here are some of how the public sector enterprises play a role in the economy: 

1. Capital Formation: The Public Sector has been one of the biggest reasons for the generation of capital in the Indian economy. A large amount of the money generated in the economy is because of the public sector. 
2. Employment Opportunities: The Public Sector has brought about a significant change in the employment sector of the economy. It provides the citizens with many employment opportunities in various sectors of the economy. These opportunities help in the upliftment of the citizens and the economy. 
3. Development of Regions: Public Sector Undertakings majorly consist of factories and plants that can boost the different regions’ socio-economic development. The inhabitants of the parts benefit from the establishment of these. 
4. PSUs. They benefit in ways like facilities like electricity, water supply and township.

Problems In The Public Sector Enterprises 

While the PSU aims to help in the development of the country. It is not a sector that doesn’t face problems. Hence, here are the issues which the Public Sector Enterprises face: 

• Inappropriate and Wrong Investment decisions
• Incorrect Pricing Policies
• Excessive Overhead Costs 
• Obsolete Technology
• Overstaffing 
• Trade Unions
• Lack of Accountability

Reforms In The Public Sector Enterprises 

The Indian government has many reforms regarding the Public Sector. These reforms help develop the public sector as they bring changes in the industry. Here are some of the reforms of the Public Sector: 

• New Industrial Policy, 1991
• Voluntary Retirement Scheme, 1988
• Administered Price Mechanism
• The Policy of Navratnas: PSUs are the best in the economy: they were given autonomy to perform better and increase efficiency
• The policy of Miniratnas: These are PSUs making profits continuously for three years
• The policy of Maharatnas: These are PSU’s which should have been a Navratna, listed on the stock exchange in India, and should have a global presence