Indian PSUs - role and relevance

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  Indian PSUs - role and relevance

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Read more on - Polity | Economy | Schemes | S&T | Environment

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• The story: In May 2021, the government announced it will be using three public sector enterprises (PSEs) for manufacturing Covaxin to augment the manufacturing capacity under Mission COVID Suraksha. Several other PSEs in the steel, petroleum and natural gas sectors have supplemented the efforts of the government in making available liquid medical oxygen as well as transportation of it.
• Since 1950s: India adopted the Fabian socialism model in 1950s, under PM Nehru's leadership. The PSEs in India, since their inception, played a pivotal role in realising the objective of achieving higher growth and equitable socio-economic development. Their sustained contribution to the economic and social fabric of the country has become even more relevant in the present scenario.
• Relevance of PSEs: Historically, PSEs have provided a very strong infrastructure base for the economy as well as for the industry. These PSEs were set up with socio-economic objectivity and not only profit have created a right kind of infrastructure for the economy. So to say the government has no business to be in doing business is not entirely correct. 

1. Employment creation - The PSEs were regarded as one of the key generators of remunerative employment in the formal sector, providing safe and secure jobs.
2. Asset building - The contribution of PSEs towards creation of national assets in the initial decades following Independence is particularly noteworthy, especially in sectors that are regarded as high risk and low return on investments by the private sector.
3. Global dootprint - Indian PSEs are already present across the globe in regions such as the Middle East, Africa, Europe, Asia, Latin America and North America and there is tremendous potential for Indian CPSEs and PSEs to expand their global footprint further by enhancing their competitiveness.
4. Social responsibility - Indian PSEs (or PSUs) have ensured that the reservations for SCs, STs and OBCs are adhered to. That has created lakhs of job opportunities for the under-privileged members of Indian society, and delivered social justice.

• Remodelling: Perhaps there indeed is a need to revisit the PSE policy, but more in terms of their functioning. These companies should be run by a professional board without government interference. These PSEs could be run under the PPP model or as JVs too. For the industry’s future growth and development, the government also needs to urgently focus on providing support in some key areas in the following domains: revival of PSUs, land, finance/banking/working capital, utilities and services, environmental issues and R&D. The govt. may adopt a Competitiveness Model for transforming CPSEs into efficient and globally competitive entities. 

• The key elements of such a model will be -
1. Clarity in Roadmap and Objective
2. Role Demarcation
3. Operational Independence
4. Independent and Empowered Board
5. Level Playing Field
6. Future Ready

• Summary: India should be very careful in deciding the future of the PSUs (PSEs), as they have played a role that the private sector perhaps would not have. In the post-pandemic India, where economic hardships will be a given, it would be wrong to let jobseekers totally be at the mercy of the private sector. India still isn't developed enough to allow market forces alone to decide capital and opportunities allocation. 

Read more on - Polity | Economy | Schemes | S&T | Environment

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