What are the objectives of public sector in India and Explain it's role in Indian economy
The mixed economy of India is characterised by the co-existence of public, private, joint and co-operative sectors. The objective of accelerating the pace of economic development and the political ideology have led to rapid growth of the state owned enterprises (SOEs) sectors in India.
Objectives:
The BPE Survey states, public enterprises which are also an instrument for implementation of the government's socio-economic policies, have a multitude of objectives set for them, viz.,
(i) To help in the rapid economic growth and industrialisation of the country and create the necessary infrastructure for economic development; (ii) to earn return on investment and thus generate resources for development, (iii) to promote redistribution of income and wealth; (iv) to create employment opportunities; (v) to promote balanced regional development (vi) to assist the development of small-scale and ancillary industries; and (vii) to promote import substitution, save and earn foreign exchange for the economy.
Role of Public Sector:
About the role of the public sector The Industrial Policy Resolution of 1956 stated "The adoption of the socialist pattern of society as a national objective as well as the need for planned and rapid development require that all industries of basic and strategic importance, or in the nature of public utility services, should be in the public sector. Other industries which are essential and require investment on a scale which only the State, in present circumstances, could provide, have also to be in the public sector. The state has, therefore, to assume direct responsibility for the further development of industries over a wide area". Schedule A to the Resolution enumerated 17 industries, the future development of which would be the exclusive right of the state. This Schedule A is reproduced as follows.
Schedule A:
(i) Arms and ammunition and allied items of defence equipment. (ii) Atomic energy. (iii) Iron and steel. (iv) Heavy castings and forgings of iron and steel. (v) Heavy plant and machinery required for iron and steel production, for mining, for machine tool manufacture and for such other basic industries as may be specified by the Central Government. (vi) Heavy electrical plant, including large hydraulic and steam turbines. (vii) Coal and lignite. (viii) Mineral oils. (ix) Mining of iron ore, manganese ore, chrome ore, gypsum, sulphur, gold and diamonds. (x) Mining and processing of copper, lead, zinc, tin, molybdenum and wolfram. (xi) Minerals specified in the Schedule to the Atomic Energy (Control of Production and Use) Order, 1953. (xii) Aircraft. (xiii) Air transport. (xiv) Railway transport. (xv) Ship-building. (xvi) Telephone and telephone cables, telegraph and wireless apparatus (excluding radio receiving sets.) (xvii) Generation and distribution of electricity.
Schedule B to the Industrial Policy Resolution, 1956. contained a list of 12 industries which would be progressively state-owned and in which the state would, therefore, generally take the initiative in establishing new units.
Schedule B:
(i) All other minerals, except "minor minerals", as defined in Section B of the Minerals Concession Rules, 1949. (ii) Aluminum and other non-ferrous metals not included in Schedule 'A'. (iii) Machine tools. (iv) Ferro alloy and steel tools. (v) Basic and intermediate products required by chemical industries such as the manufacture of drugs, dye-stuffs and plastics. (vi) Antibiotics and other essential drugs (vii) Fertilizers. (viii) Synthetic rubber. (ix) Carbonisation of coal. (x) Chemical pulp. (xi) Road transport. (xii) Sea transport.
The Central Government's investment in industrial enterprises increased from Rs. 29 crores spread over 5 units at the commencement of the First Plan (1951) to Rs. 159,307 crores in 240 units at the end of March 1994.
Growth of public enterprises
More than half of the total investment was of the steel, coal, minerals and metals, power and petroleum sectors.
The four decades since the commencement of planning witnessed a substantial growth and expansion of the public sector in India. Investment in industrial undertaking by the Central Government increased from Rs. 29 crores in five units in 1951 to over 1.18 lakh crores spires over 237 units (operating) at the commencement of the Eighth Plan.
At the end of March 1994 there were 240 central public sector enterprises (PSEs) excluding enterprises which have not become operational and excluding 8 companies with Central Government investment but without direct responsibility for management, 6 insurance companies and 3 financial institutions. Of these 9 were in the construction sector, 72 in services and 165 were engaged in manufacture.
There were also about 1100 State Level Public enterprises (SLPEs) with an estimated investment of about Rs. 50,000 crores. The Central PSEs included departmental undertaking (e.g.,railway, post and telecommunication), financial institution (like the public sector banks, IFCI, UTI, IDBI etc.), and non-departmental undertakings or government companies incorporated under the Company Law (e.g., the Steel Authority of India and the Indian Petrochemicals Corporation Ltd.) or corporations statutory created by Acts of Parliament (e.g., Coil India, Air India, Indian Air Lines and the National Thermal Power Corporation).
Non-departmental enterprises accounted for about 75 per cent of the vague addition, more than 50 per cent of gross investment and about a third of the total impalement in public sector enterprises (PSEs).
PSEs contributed the entire output in the case of petroleum, lignite, copper and primary lead, about 98 of Zinc, with over 90 per cent of coal, more than half of steel and aluminium and about one-third of fertilizers.