PUBLIC SECTOR UNDERTAKINGS (PSUs)

Public Sector Undertakings (PSUs) are companies or corporations in which the government (either central or state) holds a majority stake. These enterprises operate in various sectors of the economy, such as manufacturing, services, infrastructure, energy, and more. PSUs play a significant role in the economic development of a country and contribute to employment generation, revenue generation, and overall industrial growth.

There are two primary types of PSUs:

1. Maharatna, Navratna, and Miniratna PSUs: These categories are based on the financial and operational autonomy given to the companies. Maharatna, Navratna, and Miniratna are statuses conferred upon certain PSUs by the government, allowing them varying degrees of financial and operational independence to compete in the market effectively.

2. Strategic and Non-Strategic PSUs: This classification is based on the sectors in which the PSUs operate. Strategic PSUs are those that are deemed crucial for national security or for maintaining the government's presence in key sectors like defense, atomic energy, etc. Non-strategic PSUs operate in sectors where private enterprises also function and where the government's presence might not be as critical.

PSUs often play a crucial role in fulfilling socio-economic objectives, such as providing employment opportunities, fostering balanced regional development, and delivering essential goods and services to the public. They are subject to the same laws and regulations as private companies but are governed and managed by the government or its representatives.

Over time, there have been discussions and reforms regarding the efficiency, management, and strategic disinvestment of PSUs to enhance their competitiveness and overall contribution to the economy.

Objectives of Setting up Public Sector Unit (PSU)

• PSUs often play a crucial role in developing infrastructure in sectors such as power, transportation, telecommunications, and more. They invest in and manage projects that are essential for the country's economic growth and development
• One of the key objectives is to provide employment opportunities. PSUs create jobs across various sectors, thereby reducing unemployment rates and contributing to socio-economic stability
• PSUs are often established to promote specific industries that are vital for national development, such as steel, mining, energy, and defence. They play a pivotal role in ensuring the growth and sustainability of these sectors
• Some PSUs focus on providing essential services and goods at affordable rates, ensuring the availability of necessities like healthcare, education, housing, and other social welfare schemes for the public
• They contribute to the balanced development of different regions within the country. By establishing operations or facilities in less developed areas, PSUs help reduce regional disparities and promote more even economic growth across the nation
• Certain PSUs are crucial for strategic reasons such as national defense, maintaining sovereignty, and ensuring energy security. These entities are often established or supported by the government to ensure the nation's strategic interests
• While serving public interests, PSUs also contribute to the government's revenue through taxes, dividends, and other forms of income, aiding in the overall economic stability and growth of the country
• PSUs can drive technological advancements and innovation in various sectors. They invest in research and development, contributing to technological progress and enhancing the country's competitiveness

Role of Public Sector in the Upliftment of Society

• Public sector entities, such as healthcare institutions, educational facilities, public transportation, and utilities, ensure that essential services are accessible to all segments of society, irrespective of their financial status. This helps in improving healthcare, education, and overall quality of life
• Public sector units generate employment across various sectors and regions, contributing to reducing unemployment rates and providing livelihoods to a substantial portion of the population
• Public sector investments in infrastructure projects—roads, bridges, electricity, water supply, and sanitation—enhance the overall living standards and create an environment conducive to economic growth
• Government-run initiatives and programs, often facilitated through the public sector, aim to alleviate poverty, provide social security, and improve the living conditions of marginalized communities. These programs include food distribution, housing schemes, unemployment benefits, and more
• Public sector investments in education and healthcare improve literacy rates, access to quality education, and healthcare services. This, in turn, empowers individuals and communities, leading to socio-economic progress
• Public sector initiatives often focus on rural development, aiming to uplift agricultural practices, provide better infrastructure, and create employment opportunities in rural areas, reducing the urban-rural divide
• Public sector policies and regulations help in managing and protecting the environment. They implement measures to mitigate climate change, promote renewable energy, and ensure sustainable use of resources for the benefit of society
• Public sector entities often prioritize support for vulnerable groups like the elderly, differently-abled individuals, and minorities through welfare programs, subsidies, and protective legislation

Public Sector Undertaking – Reforms