The public sector deals with the production, ownership, sale, provision, delivery and allocation of goods and services by and for the government or its citizens. Prior to independence, there were only a few public sector enterprises like railways, posts, telegraphs and port trusts. The number of public sector enterprises increased rapidly after independence to promote economic development, generate resources, redistribute income and wealth, and prevent concentration of economic power. While public sector contributes over one-fifth of India's GDP and employs around 15 million people, there is an ongoing debate around its efficiency and failure to be self-sustainable without government support.

2.  The Public sectoris referred to as the state
sector or the government sector, is a part of
the state that deals with either the
production, ownership, sale, provision, delive
ry and allocation of goods and services by
and for the government or its
citizens, whether national, regional or
local/municipal.

3.  Priorto independence there were only
few Public Sector enterprises in the
country. These included Railways the
posts and Telegraphs, the Port
Trusts, the Ordinance Factories , All
India Radio.

4. Rapid
Economic
Development
Promote
Generate Redistributi
Resources of on of
Development Income and
wealth
Prevent
Concentr
ation of
Economic
Power

5.  Increase in number of control public
sector enterprises from 5 in 1991 to 246
in 2009.
 Public sector contributes over one-
fifth share of GDP.
 Public sector is the root of formation
of private sector.
 Public sector employees about 15
million person.

6.  The performance of any private
enterprise is judged from the rate of
profits that it earns. In the private
sector, profit is the indicator of
efficiency because a profit maximizing
firm can achieve its objective only by
operating at a scale and in a manner
that makes the best use of resources.
 The gross profit has remained between
13 to 15% though lately it has gone up
to 20%.

7.  Efficiency refers to allocation of resources in
a manner that the resulting product mix is the
best possible outcome.
 Investments in public sector enterprises have
also been greater and have continued to
accelerate growth in core sectors of a
developing economy .

8. Failure to generate
Sustainable Employment
Failure to Serve Public
Interest
Failure to Generate Adequate
‘Surplus’ for Development
Failure to Develop Strong
Infrastructure

10. The term Disinvestment is used rather than
privatization. Privatization implies a change in
ownership resulting in a change in
management. Disinvestment in that sense is a
wider term extending from dilution of the stake
of the government to a level where there is no
change in control to the dilution that result in
the transfer of management.

11. The issue of privatization has
generated a good deal of
controversy among
economists, political thinkers and
policy makers. Some right wing
politicians and economists believe
that only way to get rid of
inefficiency is through

12. Ensures
competition and
promote
efficiency
Flexibility in Less wastage
decision and production
making costs get reduced
Reduction Economy in
in budget government
deficits expenditure

13. Leads to
Ignores concentrati
social on of
welfare economic
power
Lead to
unemployme Not always
nt and efficient.
poverty

14.  The magnitude of disinvestment depends
upon the government policy. The mode or
manner of disinvestment can be
(i)offering shares of PSUs (ii)sale of
block equity.
TOTAL AMOUNT OF
DISINVESTMENT DONE SINCE
1991-92 up to the end of 2004-
2005 has been about 49k crores.

15.  Strong views are expressed against
disinvestment by some economists.
 The issue of disinvestment and privatization is
presented as an anti-people, anti-poor and anti-
labor policy measure.
 Even the best policies have failed to make most
of the public enterprises efficient or
economically viable.

16. FATEH SINGH PAHWA &
PRAKUL SINGLA

17. THANK YOU
FOR LISTENING
TO US