vol tion o the ndian onom 3.11
to sell their products in the market due to the lower supposed to put such jobs at the disposal of the
purchasing power of the consumers. Perhaps, that goverment which could have been distributed
is why again the responsibility of developing the along the decided reservation policy—such
basic industries was taken up by the government. reservations were considered an economic tool for
Out of the six basic industries, the cement social change.
industry had some strength in the private sector, In the highly capital-intensive sectors in
while in the iron and steel industry a lone private which the government companies were going to
company was present. The coal industry was enter, managing investible funds to set them up
controlled by the private sector and crude oil was not going to be an easy task. The government
and refining was just a beginning by then. The did manage the funds with sources like taxation,
level of demands of an industrialising India was internal and external borrowing and even taking
never to be met by the existing strength of the last refuge in the printing of fresh currencies. The
basic industries. Neither the required level of government went to justify the high taxation and
expansion in them was possible by the existing heavy public indebtness in supplying employment
number of private players. With no choice left, to the Indian employable population.
the government decided to play the main role in The PSUs were considered by the government
industrialising the country. In many of them we as the focus of the ‘trickle-down effect’. The
as a result, see a natural monopoly for the PSUs, government did everything to set up and run the
again. PSUs as the benefits were supposed to percolate
to the masses, finally reinforcing growth and
3. Employment Generation
development in the country. Employment in the
The PSUs were also seen as an important part of the PSUs was seen as the effort of the trickle down
employment generation strategy. A government in theory, simply said. At a point of time, Nehru even
a democratic set up cannot think only economics, mentioned the PSUs as the ‘temples of modern
but it has to realise the socio-political dimensions India’. The government went to commit even a
of the nation too. The country was faced with the job in every household via the PSUs—without
serious problem of poverty and the workforce was calculating the dimensions of the future labour
increasing at a fast rate. Giving employment to force in the country and the required resources to
the poor people is a time-tested tool of poverty create jobs at such a high scale. But the government
alleviation. The PSUs were thought to create went on creating new PSUs without analysing the
enough jobs for the employable workforce of the fiscal repercussions—moreover believing them
economy. to be the real engine of equitable growth. The
There was also felt an immediacy for a social employment generation responsibility of the PSUs
change in the country. The poverty of a greater was extended to such an extent by the government
section of the country was somehow connected that most of them had over-supply of the labour
to the age-old caste system which propitiated the force which started draining its profits on account
stronghold of the upper castes on the ownership of salaries, wages, pensions and provident funds
of land, which was the only means of income and (the latter two had late financial impact).
livelihood for almost above 80 per cent of the
4. Profit and Development of the Social Sector
population. Along with the ambitious policy of
land reforms, the government decided to provide The investment to be made by the government
reservations to the weaker sections of the society in PSUs was in the nature of asset creation and
in government jobs. The upcoming PSUs were these entities were to be involved in production