role of public sector in indian economy

1.  Role of public sector in Indian Economy
 By:-RANJEET KUMAR

2. public sector
 The public sector is the part of the
economy concerned with providing
various governmental services
 In India, a public sector company is that company in which the Union Government
or State Government or any Territorial Government owns a share of 51 % or more.
 Currently three sectors left reserved only for the government
 Railways,
 Atomic energy and
 explosive material.
 Private sectors/players are not allowed to operate in these sectors.

4. private sector
 The private sector is the part of the economy, sometimes referred to as
the citizen sector, which is run by private individuals or groups.
 Basic objective :Earning Profit
 These are top private companies of india
 Reliance Industries Limited
 Tata Consultancy Services (TCS)
 Infosys Technologies Ltd
 Wipro Limited
The entry of new private sector could introduce competition . The existing
PSU’s will be forced to go commercial and respond to the market discipline.

5. public sector
Owned ; Managed and Controlled by the Govt.
Funded by the Govt.
Welfare Oriented
The public sector includes such services as
• Police,
• Military,
• Public roads,
• Public transit,
• Primary education and
• Healthcare for the poor

6. Organization of Public Sector
• Ministry ( Railway , Finance etc)
• Departmental Undertaking ( Defence , Post & Telegraph ,
Defence production unit)
• Statutory Corporation( LIC, AIR India, IFC,RBI,ONGC,NTC etc..)
• Central Board (Bhakra Nangal, Hira Kund ,Nagarjun Sagar dam)
• Government Companies ( Ashok Hotels, ITI, HMT Hindustan
shipyard etc)

7. Role of publicsectors in the development of
the country
 Capital Formation: The role of public sector
in collecting saving and investing them during the planning ear has
been very important.
 Employment Generation: Public
sector has created millions of jobs to tackle
the unemployment problem in the country.
 Public sector has also contributed a lot
towards the improvement of working and
living conditions of workers by serving as a
model employer.
 Checking monopolies and concentration of
power in the hands of few.

8.  Balanced Regional Development: Public sector undertakings have located
their plants in backward parts of the county. These areas lacked basic
industrial and civic facilities like electricity, water supply, township and
manpower
 Export Promotion and Foreign Exchange Earnings: The State Trading
Corporation (STC), the Minerals and Metals Trading Corporation (MMTC),
Hindustan Steel Ltd., the Bharat Electronics Ltd., the Hindustan Machine
Tools, etc., have done very well in export promotion.
 Promotion of Research and Development:
 Performance of Central Public Sector
Undertakings

9.  To accelerate export promotion and import
substitution
 Public sector units add huge revenue to the
Government treasury through :-
 excise duty,
 customs duty,
 dividend,
 profits and other direct taxes.
 it will help to increase a bulk amount of
resources for a sustainable planned economic
growth
 Eliminating dependence on foreign aid and
foreign technology

10. Minerals andMetal Trading Corporation
• India's Largest International Trading
Company
• Also imports imp. Commodities like ferrous
and non ferrous metals to the industries as
well as the agricultural products.
• Known as MMTC ltd.

11. Public Sector Undertakings (PSU)
 The government-owned corporations are termed
as Public Sector Undertakings (PSUs) in India

12.  In a PSU majority (51% or more) of the paid up share
capital is held by central government or by any state
government or partly by the central governments and
partly by one or more state governments.
 The number of PSUs like Bharat Heavy
 Electricals Ltd. HMT Ltd, Hindustan Steels Ltd.,
 State Trading Corporations have contributed lot
 for increasing the foreign exchange reserve.
 As of 31st March 2016, there were as many as 320
CPSEs (excluding 7 insurance companies). The
number of profit making CPSEs as on 2015-16 stands
at 165 with a total profit of Rs. 1,44,523 crore .
 (Source: Public Enterprise Survey 2015-16)

13.  As agriculture is the backbone of Indian economy,
Public Sector Banks (PSBs) play a crucial role in
pushing the agricultural economy
 They are less concerned with making profits as
compared to private sector but they need profits
 A number of PSUs are highly profitable and denoted
as ‘Maharatnas’ and 'Navaratnas'.

14. Maharatna
1. National Thermal Power Corporation
Limited(NTPC)
2.Oil and Natural Gas Corporation
Limited (ONGC)
3.Steel Authority of India Limited (SAIL)
4.Bharat Heavy Electricals Limited (BHEL)
5. Indian Oil Corporation Limited(IOCL)
6.Coal India Limited (CIL)
7.Gas Authority India Limited(GAIL)

15. Navratna
Bharat Electronics Limited Bharat Petroleum Corporation
Limited
Container Corporation of India
Limited
Engineers India Limited
Hindustan Aeronautics Limited Hindustan Petroleum Corporation
Limited
Mahanagar Telephone Nigam
Limited
National Aluminium Company
Limited
National Buildings Construction
Corporation Limited
NMDC Limited
Neyveli Lignite Corporation
Limited
Oil India Limited
Power Finance Corporation
Limited
Power Grid Corporation of India
Limited
Rashtriya Ispat Nigam Limited Rural Electrification Corporation

17. Maharatnas and Private Sector Firms:
Weighted Return on Assets (ROA)
Rk
Source: Author’s calculation using data from capitaline ….. http://www.nipfp.org.in/publications/working-papers/1776

18. Maharatnas and Private Sector Firms:
Weighted Return on Capital (ROC)
 Source: Author’s calculation using data from capitaline
 Source: Author’s calculation using data from capitaline
 Source: Author’s calculation using data from capitaline
 Source: Author’s calculation using data from capitaline

19. SL.
NO.
SCRIP
CODE
COMPANY
MARKET
CAPITALISATIO
N
(Rs.crore)
CPSEs-Central Public Sector Enterprises (Companies where the direct holding of the
Central Government or of other CPSEs is 51% or more)
1 533278 COAL INDIA LTD. 157372.22
2 500312 OIL & NATURAL GAS CORP.LTD. 144887.23
3 532555 NTPC LTD. 135308.07
4 532898 POWER GRID CORP.OF INDIA LTD. 103266.02
5 530965 INDIAN OIL CORP.LTD. 89190.83
6 526371 NMDC LTD. 50252.78
7 532155 GAIL (INDIA) LTD. 47160.35
8 533098 NHPC LTD. 37332.75
9 500103 BHARAT HEAVY ELECTRICALS LTD. 35441.25
10 500547 BHARAT PETROLEUM CORP.LTD. 34035.58

20. Reasons for poor performance
of public sector enterprises
 Political interference
 Long Gestation period
 Lack of efficiency
 Construction expenditure
 Industrial disputes
 effect of location
 Lack of good management
 Irresponsible labor
 Underutilization of production capacity
 High capital output ratio
 Over capitalization
 corruption

21. NEED OF PSUs
 Economic development
 Development of backward Areas
 Employment generation
 Defence
 Labour welfare
 Consumer welfare
 Public utilities
 Self-reliance