Public Sector Undertakings in India: Government-Owned Entities

Public Sector Undertakings (PSUs) in India are government-owned entities that play a crucial role in the country's economic development. The government has majority ownership (at least 51%) in these entities. PSUs are also formed through joint ventures of multiple PSUs, each performing commercial activities on behalf of the government.

Classification of PSUs in India

PSUs in India are categorized based on the level of government ownership:

• Central Public Sector Undertakings (CPSUs): Owned by the central government or other CPSUs.
• State Public Sector Undertakings (SPSUs): Owned by state governments.

Further classification of CPSUs and SPSUs includes:

• Strategic Sector: PSUs operating in vital sectors like defense, energy, and infrastructure.
• Non-Strategic Sector: PSUs operating in sectors such as consumer goods and services.

The Rise of Public Sector Undertakings in India

The establishment of PSUs in India can be traced back to the country's independence in 1947. India's post-independence economic policies focused on industrialization and self-sufficiency, necessitating government intervention in strategic sectors. The Industrial Policy Resolution of 1956, adopted during the Second Five-Year Plan, laid the foundation for PSUs. It prioritized strategic sectors, nationalized corporations, and subsequently expanded into consumer goods and services. PSUs played a vital role in India's economic growth, increasing exports, reducing imports, driving infrastructure development, and creating employment opportunities.

Ratna Status: A Recognition of Performance

The government recognizes high-performing CPSUs with the "Ratna" status, offering them enhanced financial autonomy. These include:

• Maharatna: The highest Ratna status, signifying exceptional financial performance and scale. Maharatna PSUs have greater investment authority and can invest up to 15% of their net worth in a project without explicit government approval. There are currently 13 Maharatnas in India.
• Navratna: Awarded to PSUs demonstrating strong financial performance and strategic importance. Navratna PSUs have greater autonomy in decision-making and investment authority. There are currently 14 Navratnas in India.
• Miniratna: Awarded to PSUs exhibiting good financial performance and operational efficiency. There are two categories of Miniratnas, with differing levels of financial autonomy. There are currently 72 Miniratnas in India.

Top Profit-Making CPSUs in India

The table below showcases the top 10 profit-making CPSUs in financial year 2021-22.

S. No.	CPSE Name	Net Profit (₹ crore)	Share (%)
1	Oil and Natural Gas Corporation Limited (ONGC)	40,305	15.27
2	Indian Oil Corporation Limited (IOCL)	24,184	9.16
3	Power Grid Corporation of India (PGCIL)	17,074	6.48
4	National Thermal Power Corporation (NTPC)	16,111	6.11
5	Steel Authority of India Limited (SAIL)	12,015	4.55
6	Coal India Limited (CIL)	11,202	4.24
7	Gas Authority of India Limited (GAIL)	10,364	3.93
8	Rural Electrification Corporation (REC)	10,046	3.81
9	Power Finance Corporation Limited (PFCL)	10,022	3.80
10	National Mineral Development Corporation Limited (NMDC)	9,398	3.56
Total (1-10)		1,60,742	60.91
	Other CPSEs	1,03,153	39.09
Aggregated profit of profit-making CPSEs		2,63,895	100

Role of PSUs in India's Economic Growth

PSUs in India play a significant role in the country's economic development. Their objectives include:

• Infrastructure Development: PSUs contribute to building and maintaining essential infrastructure, such as power plants, railways, and roads.
• Economic Growth: PSUs are key drivers of economic growth by generating employment and contributing to national income.
• Job Creation: PSUs offer a significant number of job opportunities, particularly in sectors where private investment is limited.
• Self-Sufficiency: PSUs help India reduce dependence on imports and promote self-reliance in key sectors.
• Social Welfare: PSUs are involved in providing essential services like education, healthcare, and housing to the public.

Central Public Sector Undertakings (CPSUs) in India

CPSUs are administered by the Ministry of Heavy Industries and Public Enterprises. The Department of Public Enterprises (DPE), Ministry of Finance, acts as the nodal department for all CPSUs.

Privatization of Public Sector Undertakings in India

The government has implemented privatization measures in recent years, divesting its ownership in some PSUs to raise capital and improve efficiency. This is driven by a desire to streamline the economy and allow for more private sector participation. Here are some notable examples of privatized CPSUs in India:

• Air India: Sold to Tata Group in 2020.
• Bharat Aluminium Company (BALCO): Sold to Vedanta Limited in 2000. BALCO closed in 2002.
• CMC Limited: Sold to Tata Consultancy Services in 2001. Merged with TCS in 2016.
• Hindustan Zinc Limited: Sold to Vedanta Limited in 2001.
• Indian Petrochemicals Corporation Limited (IPCL): Sold to Reliance Industries.
• Maruti Udyog Limited: Sold to Suzuki.
• Videsh Sanchar Nigam Limited (VSNL): Sold to Tata Group in 2008.

Future of Public Sector Undertakings in India

PSUs in India are evolving to adapt to a changing economic landscape. The government continues to promote privatization while maintaining a strong presence in strategic sectors. PSUs are increasingly focusing on operational efficiency, technological advancements, and international competitiveness. The Ratna status system provides a framework for recognizing and rewarding exceptional performance, encouraging PSUs to strive for greater efficiency and economic contribution.