Public Sector Undertaking (PSU)

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About Public Sector
Public sector, often regarded as "state sector", is mainly a part of individual states, which deals with the production, allocation as well as the delivery of different goods or services by its citizens or government. This sector includes administration of urban planning, delivery of social security and organization of national defense. A publicly owned company or corporation and partially or completely outsourced companies can be termed as a public sector company.

About Public Sector in India

In India, a public sector company or undertaking is meant to refer any corporation or company that is owned by government. Such a company, where the Union Government or State Government or any Territorial Government owns a share of 51 % or more is mostly regarded as a company belonging to the public sector.

Before the independence of India, there were a handful of public sector companies in the nation. Indian Railways, the Port Trusts, the Posts and Telegraphs, All India Radio and the Ordinance Factory are some of the major examples of the country’s public sector enterprises. However, post Indian independence, some policies for the development of the socio-economic status of the country were planned out by the then visionary leaders, where the public sector were used as a tool for the self-reliant growth of the nation’s economy.

Different sectors in Public Sector in India

Presently, the public sector in this country includes sectors like the coal industry, oil and petroleum industry, steel industry, banking industry, thermal power industry, jute industry, food industry, insurance industry, telecommunication industry, aviation industry, service industry, agriculture industry, manufacturing industry, mining industry, electricity industry, engineering industry (Light and medium) etc. To name a few of the famous public sector companies in India are:

  • Air India Limited (A. I. L.)
  • Airports Authority of India (A. A. I.) Limited
  • Akaltara Power Limited
  • Andaman and Nicobar Islands Forest and Plantation Development Corporation
  • Balmer Lawrie and Company Limited
  • Bank of India (B. O. I)
  • Bengal Chemicals and Pharmaceuticals Limited (B. C. P. L.)
  • Bharat Coking Coal Limited (B. C. C. L.)
  • Bharat Dynamics Limited (B. D. L.)
  • Bharat Electronics Limited (B. E. L.)
  • Bharat Heavy Electricals Limited (B. H. E. L)
  • Bharat Petroleum Corporation Limited (B. P. C. L.)
  • Bharat Sanchar Nigam Limited (B. S. N. L.)
  • Coal India Limited (C. I. L.)
  • Electronics Corporation of Tamil Nadu Limited (E. L. C. O. T.)
  • Hindustan Aeronautics Limited (H. A. L.)
  • Indian Institutes of Technology (I. I. T.)
  • Indian Oil Corporation Limited
  • Life Insurance Corporation of India (L. I. C.)
  • Mahanagar Telephone Nigam Limited (M. T. N. L.)
  • Mazagon Dock Limited (M. D. L.)
  • Modern Food Industries (India) Limited (M. F. I. L.)
  • National Institutes of Technology (N. I. T.)
  • N. T. P. C. Limited (Earlier National Thermal Power Corporation)
  • Nuclear Power Corporation of India Limited (N. P. C. I. L.)
  • Oil and Natural Gas Corporation (O. N. G. C.)
  • Power Grid Corporation of India Limited
  • State Bank of India (S. B. I.)
  • Steel Authority of India Limited (S. A. I. L.)
  • Tamil Nadu Electricity Board (T. N. E. B.)
  • Tamil Nadu State Transport Corporation (T. N. S. T. C.)
  • The Jute Corporation of India Limited

Contribution of Indian Public Sector in the Government of India

The public sector of the country has got a significant contribution to the development of Indian economy. Being a powerful instrument of economic growth, this sector has got the following contributions towards the growth of this nation’s economy:

Balancing Regional Development: Public sector has even reached those regions of India that lacked the primary civic as well as industrial facilities like water supply, electricity, manpower, township etc. For example, the steel plants of Durgapur, Bhilai and Rourkela have contributed towards the growth of these regions.

Contribution towards Public Exchequer: According to the Indian Chamber of Commerce, the sector is responsible for more than 20 % of tax collections (Both direct taxes and indirect taxes). Thus, in turn, this sector mobilizes financial funds for the requirement of the nation’s planned development.

Employment: Millions of employment opportunities were being created by this public sector that minimized the problem of unemployment in the nation. Apart from ensuring job security to many people by taking over numerous sick units, this sector accounts for approximately two third of the country’s total employment.

Filling the space in Capital Goods: During independence, there was a notable gap in India’s industrial structure in terms of steel, oil refining, fertilizers, chemicals and many more, which was filled up by the rapid industrialization in the country.

Foreign Earnings and Export Promotion: Over the years, the earnings from the foreign exchange have increased remarkably. Apart from that, public owned companies like State Trading Corporation (S. T. C.), Hindustan Steel Limited, Bharat Electronics Limited (B. E. L.), Minerals and Metals Trading Corporation (M. M. T. C.) etc. have worked well for the promotion of export in India.

Import Substitution: Public sector companies like Oil and Natural Gas Commission (O. N. G. C.), Bharat Electronics Limited (B. E. L.), Indian Oil Corporation Limited etc. were started solely for the production of goods, which earlier needed to be imported from foreign countries that involved huge expenses.

Enhanced Research and Development: Since majority of the public sector enterprises are involved in heavy industrial as well as high technological work, which necessitate the undertaking of programs related to research and development, the public sector in India has enhanced the quality and amount of research and development.

Besides the ones mentioned above, this sector has successfully achieved the following constitutional goals:

  • Forming a socialistic society
  • Increasing control over India's economy
  • Limitation of financial power in the hands of private sector

Public Sector's Percentage of share in India G. D. P. (Gross Domestic Products)

As per a report published by the Indian Chamber of Commerce, P. S. U.s or the Public Sector Units account for more than 22 % of the total G. D. P. in India.

Future Prospects of Indian Public Sector

The public sector in this country has been expanding day by day. In the upcoming years, this public sector has got a good prospect in India as contributed by the different sectors included in it. Following are some of the key prospects of the varied industries, which are included in India public sector that in turn reflects the growth prospect of public sector in India:

The increasing demand for power has made the Indian government to concentrate on their mission of "Power for all" by the year 2012 that would require the capacity of installed power generation to be minimum 2, 00, 000 MW from its present capacity of around 1, 44, 565 MW.

As per the latest R. N. C. O. S. report of "Indian Steel Industry Outlook to 2012", production of crude steel in India is expected to grow at the C. A. G. R. (Compound Annual Growth Rate) of about 10 % in between the period of 2010 and 2013.

As far as the Indian aviation industry is concerned, the sector is forecasted to be among world's 5 best aviation sectors in the coming 10 years. According to the highlights of the I. C. A. N. (International Civil Aviation Negotiation), the national air traffic is estimated to reach around 160 million passengers to 180 million passengers per year whereas, the international traffic is expected to exceed 80 million in a year.

During the financial year 2010 – 2011, the country exported products of refined petroleum up to an amount of 50 million tones. By the end of the financial year 2014, owing to the increasing refining capacity, this amount is likely to reach around 70 million tones.

The telecommunication industry in India is among the fastest growing sectors in the country. The base of mobile phones is expected to touch approximately 900 million figure by 2012 and 1.25 billion by the year 2015.

Last Updated on 1/10/2012