IMPORTANCE OF PSU IN INDIAN ECONOMY

Since independence, among all sectors that have contributed to the growth of Indian economy, PSU sector has been the most consistent and prominent given its contribution towards the country. PSU sector has not only contributed in terms of GDP’s growth and development, but also assured self-reliance to the people of the country. It has been through the services of PSU sector that has laid the foundation for various other sectors to grow and prosper. It is the PSU sector that has given the framework for others sectors to manifest growth and abundance in the country.

In the year 2014-15, the PSU sector had a gross turnover of Rs. 19,95,902crore in comparison to Rs. 20,66,057 crore in 2013-14 showing a decrease by 3.4%. Along the same lines, the profit of PSUs also showed a fall of 12.9% to Rs. 1,30,363crore in 2014-15 from Rs. 1,49,636 crore in 2013-14. Amongst the various sectors, PSUs from Petroleum (Refinery & Marketing), Coal, Crude Oil, Steel, Electricity (Power Generation), Trading and Marketing services contributed the most to country’s GDP. PSUs from other sectors, namely, Tourist Services, Financial Services, Electricity (Power Transmission), Transport Services, Industrial Development & Technical Consultancies Services, Consumer Goods and Agro Based Industries, showed a considerable positive change in their contribution to India’s GDP.

Amongst its contribution to the country, PSU sector has provided self-reliance to the people of this country as its top most contribution. In case of events like wars or famines, PSU sector has shown solidarity and demeanour in handling such events by improvising and ensuring continued support to the country. In the events of 1965 and 1971 wars, which were fought primarily in the states of Rajasthan, Punjab, Jammu & Kashmir, the respective states had to halt all of their economic activities to ensure security of the people in their states. During such time, it was the PSU sector that provided food supplies and security to its people by providing job security and advancement during such times of panic and stress. 

Public sector undertakings also play a pivotal role in providing employment to more than one million people serving close to ten million lives in the country. In 2014-15, PSUs employed close to 12.91 lakh people in comparison to 13.49 lakh in 2013-14. Even though, the employment by PSUs sector shrunk by sixty thousand. As a point to include, 30% workforce of PSUs belongs to high skilled labour and as an efficient process, various PSUs have started outsourcing employment to other vendors and players to ensure efficiency and productivity. 

India, now with population o

f over 1.2 billion, has witnessed enormous growth in various sectors including building, logistics, travel, media, IT and much more to follow. But, the ultimate premise giving the foundation for each of these sectors to grow and prosper has been the sustenance and longevity of PSUs. In 2008-09, when the entire world crashed as a result of global meltdown, India was the sole country standing tall on its feet defeating the global meltdown around. PSU banks with strong fundamentals, abiding by the stringent guidelines of RBI, never had to fear the global uncertainty that existed in the market back in the day. The common man of India, including the rural and poor, never had to face the scare of food security given the backing of strong agro-based PSUs like National Seed Corporation to ensure sufficient food supply and price stability to the poor.

The government of India under th

e leadership of PM Shri Narendra Modi had successfully launched the ‘Make in India’ initiative in 2014-15. The program is part of a wider set of nation-building initiatives and intends to transform India into a global design and manufacturing hub. Now, under this plan, the government of India has enhanced its focus on PSUs belonging to 25 important sectors of economy. PSUs in various sectors will get a chance to elevate their scale of operations, optimize allocation of resources, upgrade plants and procedures and bring more recognition to India as a manufacturing hub. PSUs serving the country for the past six decades have always stood toe-to-toe with government of India to enhance economic development for the country and will continue to add prowess and expertise towards the success of this program. 

PSUs such as Bharat Heavy Electricals, Steel Authority of India Limited after earning the Maharatna PSU status, during their journey of more than five decades have not only made a mark for their own respective organization and sector but also have laid the ground for growth of various sectors and industries. Huge capital is required of the establishment of such organization and plays a pivotal role in being an engine of growth. The capital of this magnitude is made available by government of India to propel and boost the infrastructure for the nation. It’s the sincere and ardent work of these exceptionally run organizations that have paved the way of growth for power, infrastructure, roads and construction sectors. 

Another prudent role played by PSU sector is to ensure development in different parts of the country. Large PSU such as Indian Oil Corporation Limited have offices and production units in different parts of the country, from third tier towns to first tier cities, offering opportunities of growth in economically backward areas. By undertaking such roles, PSU establishments ensure equal opportunities of growth and prosperity for all sections of society and nation. 

PSU establishments usually operate with a higher motive of working. Unlike private players, which are only concerned about profit maximisation, PSU establishments serve a higher purpose for its sustenance. PSU enterprises work on issues of national importance such as elevating the poor, food for society, roads and infrastructure to ensure growth, electricity to villages, educating the poor and many social causes. Such issues of national prominence are never taken up by any other entity but PSUs. For example, during the 1980s when there was a need to upgrade technology and communication in the country, it was MTNL, funded by Ministry of Telecommunications that laid the infrastructure for growth and ensured connectivity to the friends and family living in another part of the world. Similarly, NTPC Limited, India's largest power company was set up in 1975 to accelerate power development in India to serve the people of the country. Today, as India’s largest power utility with an installed capacity of 47,228 MW, plans to become a 128,000 MW company by 2032 and aspires to be the world’s largest and best power major. 

Now, given the motive of PSUs, they also act as shield to protect the common man against any activity that is essential for survival. For example, with growth in agriculture sector, competition from private players has become a major challenge for farmers and citizens of the country. On the possible challenge that can be posed by private players is price manipulation and monopolistic policies. Private players with huge capital expenditure and marketing initiatives can pose a huge threat to the nation for its food security and survival. In such circumstances, it is PSU like National Seed Corporation that stands tall in its contribution to provide rice and wheat crops to the rural and poor of the country and prevent the country from any illegal price fluctuation and inflation. As an example of consolidation from the industry, after Mahyco Monsanto Biotech (India) Limited joined hands, they practiced monopolistic price policy to take advantage of cotton growers. The anti-monopoly watchdog Competition Commission of India (CCI) had prima facie found against Indian subsidiary of US Agro Chemical giant in violation of competition regulation and initiated the investigation into the matter following November 2015 directive of the agriculture ministry to look into alleged monopoly practices by the (MMBL), which is an equal joint venture between Mahyco and Monsanto. Now, to ensure safety from such acts of monopolistic practise or price manipulation in the future, it is the PSU that take initiatives to ensure safety for farmers and consumers.

To sum up, the importance of PSU in its contribution to Indian economy cannot be gauged from the lens of quantifiable numbers alone. It’s worth to the Indian economy needs to be comprehended from its contribution to the society as well in addition to its numbers. The level at which PSU sector brings national security, self-reliance, export promotion, regional equality and employment opportunities need to be assessed to arrive at the prowess and invaluable contribution of PSU sector in the Indian economy.