Elucidate the changed role of public sector undertakings in the context of privatisation and liberalization
Answers
The initial several Five Year Plans were designed to promote and safeguard the public sector. Up until 1991 in the post-independence period, the public sector was an integral part of the development and progress of our country. But once the era of privatization and globalization started in 1991, the role of public sector companies was re-evaluated as India opened up its economy.
The government invested huge capital in infrastructure and manufacturing industries. As private sector was not in a position to handle, the central and state governments depended on public enterprises to provide the services. The public sector actively participated in a competitive market with the private enterprises. Inefficiency and uninspired management were not tolerated. The public sector was also held responsible for the losses of their companies.
Also, the government of India introduced four major changes regarding the public sector, which changed the role of public sector in our country forever. They are (i) Reduction in Industries Reserved for the Public Sector (ii) Disinvestment (iii) Closure of Sick Units (iv)Look for memorandum of Understanding .