‘Public Sector Enterprises in India’


A state-owned initiative in India is called a public sector undertaking or a public sector enterprise. These establishments are owned by the union government or one of the many state governments or both. The company stock needs to be majority-owned by the government to be a PSU.

Public sector enterprises in India have now and always been the whipping boys of successive governments. With the present regime contemplating the closure of several central public sector units, these enterprises are facing the biggest ever crisis today. It is nothing short of an existential dilemma if it is a public sector enterprise in India.

With hindsight, Public Sector Undertakings in India have laid a strong foundation for industrial development and they still are the biggest source of employment generation for the government. Since PSUs, by their very nomenclature, are less concerned with making profits, they play a key role in nation-building activities. PSUs also provide leverage to the Government to intervene in the economy directly or indirectly to achieve the desired socio-economic objectives and maximize long-term goals. But, this was then. The scenario is changing dissolutely.

Given the fact that PSEs in India are on a vanishing spree and the orgy seemingly avaricious, this book is well-timed. ‘Public Sector Enterprises in India: Evolution, Privatization and Reforms’ by Govind Bhattacharjee is, as the blurb says, ‘is a comprehensive and authoritative work covering the entire the public sector in India, including the financial sector public enterprises such as banks and insurance companies.’

A former civil servant who retired as Director-General from the Office of the Comptroller and Auditor General, Bhattacharjee is currently a Professor of Applied Economics at Delhi’s Indian Institute of Public Administration. A prolific writer and columnist with interests in diverse areas – from public finance to photography and popular science – Bhattacharjee has published nine books. Author of Special Category States of India’; GST and Its Aftermath; Is Consumer Really the King; a trilogy on evolution: Story of UniverseStory of Evolution and Story of Consciousness, the present book is close to his avocation.

The book begins with the philosophy behind the public sector and traces its evolution in India and its subsequent privatization and disinvestment after the economic liberalization of 1991. Based on the latest data and the newest developments, it examines the plight and options of a public sector paralyzed by excessive government interference which is also entombed hopelessly between the State and the Market.

Drawing widely upon global experiences and with the help of various reports, the book argues that ‘disinvestment and privatization’ need not be the only answer to reform the public sector companies. They can be rejuvenated and transformed into global champions if freed from the stifling controls by insipid government machinery and by de-politicization. It further articulates that the government’s roles as a majority stakeholder, policy-maker, and regulator should be detached. This can come about only by changing the holding structure.

Divided into seven chapters – Concept and Philosophy behind the Public Sector; Nature and Scope of the Public Sector in India and the World; Performance of the Central Public Sector Enterprises; Wasteland of State Public Sector Undertakings; Financial Sector Public Enterprise; Liberalization and Privatization: The New Social Contract; Reform and Reform Roadmap of PSEs – the book – all of 400-plus pages – is the whole kit and caboodle about India’s PSEs.

Giving examples of the multiple conflicts of interest writes Bhattacharjee in the preface: ‘in the landscape of the public sector in India, the government’s role as the owner of the PSEs overlap with its role as their regulator and policymaker. The efficiency, objectivity, and profitability of the PSEs suffered as a result of no fault of their own, and they all along have been blamed unfairly for mismanagement and inefficiency, for which the government was actually responsible. Despite the veneer of autonomy given to them the government never refrains from interfering with every aspect of their functioning, often at the cost of their profitability. There can’t’ be two opinions about this.’

What enhances the importance of the book is its comprehensive analysis with cutting-edge arguments. Prof. Bhattacharjee has taken pains to assimilate as many numbers as possible to proffer his point of view. Rather than advocating wholesale privatization and disinvestment of the PSEs and the complete rollback of the state from economic and welfare activities, the book suggests a middle course involving a drastic reduction of the public sector. It suggests major reforms at the level of the states – he calls them wasteland of PSEs – to be followed by meaningful reforms in the light of the knowledge and insight gained from the similar experience of other countries.

A very useful book on the history and diatribes of India’s public sector, this volume could help in generating a still wider debate – particularly when the Narendra Modi government has embarked on massive privatization even of profitable entities.

‘Public Sector Enterprises in India’

Govind Bhattacharjee

Sage Publications India

New Delhi


Rs 1195

Bhaskar Parichha is a journalist



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