Factors behind growth of India’s public sector enterprises (PSEs)

Source: The post Factors behind growth of India’s public sector enterprises (PSEs) has been created, based on the article “What we need is a farmer–friendly agri–export policy” published in “Indian express” on 13th May 2024.

UPSC Syllabus Topic: GS Paper 3 – Indian Economy – Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

Context: The article discusses that successful management and growth of India’s public sector enterprises (PSEs), has led to their improved performance. Factors behind growth of India’s public sector enterprises (PSEs)

What improvements have been made in the public sector under the present government?

Increased Production and Profits: Key public sector enterprises like Oil India Ltd, IOCL, and BPCL have reached record levels in production and profits. For example, Oil India Ltd posted its highest-ever crude and natural gas output.

Banking Sector Recovery: Public sector banks have shown significant improvement, t in the fiscal year 2022-23, these banks achieved their highest-ever profits and lowest-ever levels of NPAs.

Strategic Divestment: The government’s divestment strategy includes the privatization of Air India due to its inefficiencies, while holding back on selling its stake in BPCL due to its strategic importance and significant profitability.

Stability in Crisis: During the crisis when international crude prices soared, the government-owned oil marketing companies (OMCs) kept fuel prices unchanged to control inflation, a fact clearly stated in the article. This helped manage economic pressures without sacrificing the financial health of the OMCs.

How has the present government influenced the operation of PSEs?

Professional Autonomy: The government has provided PSEs with the freedom to make business decisions. This has resulted in enhanced performance metrics such as IOCL achieving its best refinery throughput and BPCL reporting its highest-ever profits.

Strategic Investment and Expansion: The government has enabled PSEs to undertake large capital expenditure projects. Oil and gas PSEs are currently implementing 275 projects with a total investment of over Rs 5.67 lakh crore, demonstrating significant commitment to strategic growth and national development.

Selective Divestment: The government’s calibrated approach to divestment, like privatizing Air India while retaining BPCL, shows strategic influence in decision-making to optimize national economic benefits.

Question for practice:

Discuss the improvements and operational influences on India’s public sector enterprises (PSEs) under the present government.