public sector in India

1. PUBLIC SECTOR IN INDIA

2. MEANING OF PUBLIC ENTERPRISE
 Public enterprise refers to that industrial institution
which is owned, managed and controlled by the
government. In these companies the direct holding
of the central government is 51% or more.
 Some of the public sectors in India are ─
 Bharat electronics limited.
 Bharat petro resources.
 Air india limited.

3. DEFINITION OF PUBLIC ENTERPRISE
 “Public enterprises are industrial, commercial and
economic activities carried on by the central
government or by the state government or jointly by
the central and the state government.”
─ S.H. Khera

4. ROLE OR SIGNIFICANCE OF PUBLIC
ENTERPRISES/PUBLIC SECTOR
 Following points may be noted to explain the
increasing role of public sector in the Indian
economy─
 Capital formation─
plan Public sector
(in percent)
First plan
Second plan
Third plan
Ninth plan
Tenth plan
Eleventh plan
46
54
63
33
24
21.9

5.  Contribution to gross domestic product:
 Export promotion:
In year 2014-15,export earnings of public sector were
1,03,071 crore.
 Promote employment:
On march 2012, public sector enterprises offered
employment to 176.1 lakh people.
 Foreign reserves:
The foreign reserves of public sector enterprises was
$362.79 billion on 10 February 2017
year GDP
1992-93
2012-13
14%
20.4%

6.  Basic industries.
 Development of infrastructure.
 Import substitution.
 Less regional disparities.
 Socialistic pattern of society.
 Resources for economic development.
 Growth of ancillary industrial units.
 Rehabilitation of sick units.
 Helps in raising per capita income.

7. EVALUATION OF PUBLIC SECTOR
ENTERPRISES
o Profitability of public sector enterprises:
particulars 1980-
81
2000-01 2010-11 2013-14 2014-15
Investment(in
rupee crore)
Net profit after
tax(in rupee
crore)
Percentage of
profit (after tax)
on capital
employed
18,207
(−)203
(−)1.1
3,31,372
15,653
4.72
9,49,499
92,077
9.70
17,44,321
1,29,109
7.40
18,34,050
1,03,003
5.62

8.  Main defects of public sector enterprises:
1) Lack of efficiency.
2) Lack of good management.
3) Social objectives.
4) Long gestation period.
5) More construction expenditure.
6) Industrial disputes.
7) Effect of location.
8) Lack of competition.
9) Irresponsible staff.
10) Under utilization of production capacity.
11) High capital output ratio.
12) Over staffing.
13) Over capitalization.

9. CONCLUSION
 The public sector in spite of its defects is a driving
force for private sector in India because it’s the
public sector that takes initiative to develop
infrastructure. There have been declines in the
performance of public sector companies but we
should never forget they provide the foundations to
the private sector.