Role of Government Performance and Problems of Public sector Industries in India. Performance and problems of private industries in India. Government measures for promoting industries in India

3. IntroductionIntroduction
• Without public enterprise, there can be no
private enterprise.
• A large part of national output goes to satisfy
public wants such as defense, law & order,defense, law & order,
courtscourts
• Economy is behavior of the private sector,
political philosophy, social attitudes and
administrative system

4. Role of the GovernmentRole of the Government
• Regulatory RoleRegulatory Role
– Government may regulate the business activities
directly and indirectly through Import and Export
duties and monetary system
– The licensing system and reservation policy
regulate the entry of firms
– Regulation of mergers and acquisition, Taxes,
Subsidies

5. Cont…Cont…
• Promotional RolePromotional Role
– Infrastructure facilities such as transports,transports,
communication & financecommunication & finance the Govt. assumes
direct responsibility to build them
• Entrepreneurial RoleEntrepreneurial Role
– The private sector is generally interested only in
those industries which require less investment
and give higher returns.
– Capital goods industries requires heavy
investment and give lower returns & that too long
run.

6. Cont…Cont…
• Planner RolePlanner Role
– The market economies, economic planning has
been adopted to overcome the limitation of
market system
– For developing country need for economic
planning due to their economic backwardness
– Task of planning to achieve the best possible use
of limited resource of for economic development.

7. Role of Public Sector in the IndianRole of Public Sector in the Indian
EconomyEconomy
• Contribution to National Product
– 1950-51 8%
– 1970-71 15%
– 2002-03 23.6%
• Public units are metal industries,
communication, petroleum industries, steel
industries, fertilizer etc

8. Cont…Cont…
• Investment Year Unit Rs in Cr
1951 8 29
2004 242 3,49,209
• Development of a Strong Infrastructure
•Communication
•Transportation
•Power
•Education
•housing

11. Cont…Cont…
• Strong Industrial Base
– The development of basic industries and key
industries like iron and steel companies,
– Development of heavy machinery, heavy
angering, heavy electrical, heavy chemicals and
minerals and oil, cement and fertilizers
• Employment
• Turn Over

12. Cont…Cont…
• Contribution of National exchequer
– PSU contributed to the national exchequer
Rs.53,822 crores on an average in the form of
corporate-tax, customs, excise duties
• Profits
– Oil and Natural Gas Commission
– National Thermal Power Corporation
– Steel Authority of India
– Hindustan Petroleum
– Food Corporation of India and Telephone Nigam

14. Critical Review of theCritical Review of the
Working of PSUWorking of PSU
• Unduly large size of plant
• Defective Project Planning
• Autonomy Vs Control
• Problem of Recruitment of suitable personnel
• Problem of Location
• Delay in Completion of the Project and
Increase in the Costs of construction

15. Cont…Cont…
• Over-capitalization
• Over Staffing
• Underutilized Capacity
• Incentive for Higher efficiency
• Labour Relation
• Public Accountability

16. Private Sector
• Private sector companies increased from
1,35,551 in 1997-98 to 1,24,941 in 2006-07.
total Growth of increased 86.3% in 2006-07
• Employment decreased from 68,38,000 in
1997-98 to 61,95,000 in 2006-07. however
these companies share 60% employment in
total generation on employment
Particulars 1990-2000 2001-2007
Average rate of Growth 14% 14.2%
Gross Profit 20.4% 41.6%

17. Problem of Private Sector
• Problem of Industrial Finance
– Rate of domestic saving is low
– Capital Market is underdeveloped
– People invested more in gold, silver and land
• Problem of Infrastructural Facilities
– Inadequate supply of power
– Unscheduled power cuts
– Erratic power quality
– High charges
– Delay and informal payments requires for
connection

18. Cont..
• Problem of Industrial Disputes
– For wages, bonus, working hours, holidays,
working conditions.
• Problem of Foreign Competition
– Merging with WTO, withdraw from all imports
quantitative restrictions
• Problem of Monopoly and Concentration

19. Cont..
• Problem of Industrial Sickness
– Capacity in these units remain unutilized ,
underutilized, unproved technology, poor
marketing, poor maintenance
• Problem of High cost
– Raw material, Import goods, taxes, excise duty,
• Problem of Distortion in Production
Structure
– Focuses only on elite consumers