Explain the changing role of public sector
Answers
Explanation:
At the time of independence in 1947, India had just five central public sector enterprises with an investment of mere Rs 29 crore. Besides, perhaps India had fairly reasonable network of railways and extensive Posts and Telegraph covering the entire country to serve the British masters. Today India has 320 central public enterprises with investment of around Rs 12 lakh crore. As many as 165 CPSEs earned a net profit of about Rs 1.5 lakh crore and 78 CPSEs, a net loss of Rs 29,000 crore. There is, perhaps, double the number of state public enterprises. The statistics is sketchy with regard to total number of state public enterprises and their investments. But indication is that there are at least 1000 state public enterprises with investment of Rs 4-5 lakh crore. That apart there are central and state corporations, particularly, by way of railways, state road corporations, posts and so on. Investments in them run in to several lakh crores of rupees.
So it is clear that Public Sector Enterprises formed the backbone of industrial development of the country in Independent India. Of course, its role has been changing with the changing time. Initially its role was to help create the much needed industrial base and infrastructure apart from bringing about price stabilization and socio-economic development. They were also engine of growth in true sense of the term. PSEs contributed greatly to job creation by adopting labou-intensive techniques in the early part of independence, nationalization of sick textile units and setting up ancillary industries around major units subsequently. With the economic liberalization in 1991, its role changed to take on competition including global. This included reduction in jobs as a result of modernization and to improve efficiency. SAIL for example, which employed over two lakh workers to produce less than 10 million tonnes of steel in the past, employs just 80,000 workers today and produces much more. But even today it has surplu employees. It has seven times more employees than Tata steel for per tonne of steel production. This is one of the major reasons for some of the public enterprises still being inefficient. Some other companies like Life Insurance of India, which enjoyed monopoly status after nationalization in the 1950s, took on competition well after Insurance sector was opened up to private players in the late 1990s.