3.12 ndian onom
activities. It was natural for the government to gain regional development, spread of small and ancillary
control over the profits and dividends accruing industries, low and stable prices, and long-term
from them. The goods and services the PSUs equilibrium in balance of payment. Over time the
produced and sold provided disposable income to PSUs have played a critical role in promoting the
the government. The government had a conscious growth and development of the country.22
policy of spending the income generated by the By the mid-1980s, there emerged a kind
PSUs. They were to be used in the supply of the of consensus across the world (including the
‘social goods’ or what is called the ‘public goods’. IMF & World Bank) regarding the inefficiency
And thus, India was to have a developed social and under-performance of the PSUs (in the
sector. by social goods the government meant the wake of the idea of the Washington Consensus
universal supply of certain goods and services to which is said to promote ‘neo-liberal’ economic
the citizen. These included education, healthcare, policies across the world). In the wake of it,
nutrition, drinking water, social security, etc., in there commenced a process of privatisation and
India. It means that the PSUs were also visioned disinvestment of the PSUs among majority of
as the revenue generators for the development of the economies in the world—India being no
the social sector. Due to many reasons the PSUs exception to it. By late 1990s, new studies proved
would not be able to generate as much profit as was that under-performance and inefficiency could
required for the healthy development of the social be there in the private sector companies, too. By
sector. This eventually hampered the availability mid-2000s (in the wake of the US sub-prime crisis)
of public goods in the country. In place of giving a new consensus emerged among the international
profits back to the government, a large number organisations that state/government need not exit
of the PSUs started incurring huge losses and the economy and a kind of slow down towards
required budgetary support at regularly. privatisation moves of the PSUs across the world
5. Rise of the Private Sector (the world in a sense is pushing the ‘pause’ button
on neo-liberalism) is under process.
As the PSUs took the responsibility of supplying
India pursued a less ambitious disinvestment
the infrastructure and the basic industries to the
policy from 2003–04 to 2015–16 (the government
economy, a base for the rise of private sector
has decided to own controlling shares among the
industries was slowly established. With the rise
divested PSUs). Since 2016–17 financial year, the
of private sector industries in the country, the
government has decided to restart the process of
process of industrialisation was thought to be
‘strategic disinvestment’ (in which the ownership
completed. Out of the many roles the PSUs were
of the PSUs may also be transferred to the private
supposed to play, this was the most far-sighted.
sector). Such a policy of disinvestment was launched
What happened to the different roles the PSUs
by the government in 2000 which was paused by
were assigned is a totally different matter, to which
the UPA-I in 2003–04). The government has also
we will return while discussing the industrial
decided in favour of selling increased shares of the
scenario of the country. Here we have analysed
PSUs to the foreign institutions, at par with the
why the government of India after Independence
domestic financial institutions. Such policy moves
went for such an ambitious plan of expansion of
the public sector. 22. Sumit Bose and Sharat kumar, ‘Public-sector
Besides, the PSUs were aimed at many other Enterprises’, in kaushik Basu and Annemie Maertens
(eds.), The New Oxford Companion to Economics in
connected areas of developmental concerns, India, Vol. II, Oxford University Press, New Delhi,
such as, self-sufficiency in production, balanced 2012, p. 578–83.