Changing Role of Public Sector

At the time of Independence, the public sector was expected to play a leading role in the economy — either by taking part in business directly or by acting as a catalyst. It was to build infrastructure for other sectors and invest in key areas where the private sector was unwilling to go, because such projects needed heavy investment and had long gestation periods. The government therefore took on the job of developing infrastructural facilities and providing essential goods and services.

A role in transition

• The early Five Year Plans gave great importance to the public sector.
• After the 1990s, the new economic policies emphasised liberalisation, privatisation and globalisation, and the role of the public sector was redefined.
• The public sector was no longer to play a passive role; it had to actively participate and compete in the market with private companies in the same industry, and was held accountable for losses and return on investment.
• A public sector unit making continuous losses could be referred to the Board for Industrial and Financial Reconstruction (BIFR) for complete overhauling or shut down.
• Various committees studied inefficient public sector units and reported on how to improve their managerial efficiency and profitability. …