Page 214 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Indian Economic Policy

Notes (d) to ensure easier availability of articles of mass consumption, to check prices of important articles
etc. - the rationale behind setting up consumer-oriented industries;
(e) to protect employment, the Government was forced to take over sick industrial units.
In fact, over a period of time, the Government entered into many sectors for all types of good and bad
reasons and in many cases for no reasons at all.

Central Government Enterprises
As on March 31, 2010, there were 217 Central Government undertakings, excluding banks, financial
institutions and departmental undertakings like the Railways. Ports etc. The growth of investment in
Central Government undertakings is shown in Table 1. It will be clear from the table that since 1951,
the number of industrial and commercial undertakings of the Central Government had increased
from 5 in 1950-51 to 239 units in 2005-2006 and the capital investment had increased from ` 29 crores
to ` 5,79,920 crores on 31 st March 2010. The investment is in the form of equity capital and long term
loans.
Total Investment in Public Sector
Central Government Public Sector Enterprises recorded a total investment of ` 4,21,089 crores in
2006-07. The State level Public enterprises accounted for ` 2,59,180 crores as on 31.3.2005. Besides
them, departments like Railways, Posts and Telegraphs and other departments accounted for an
investment of nearly ` 50,000 crores. If all these are included, then the total public sector investment
in the entire country, in all kinds of enterprises (departmental and non-departmental), at the Centre,
State and local level, would be around ` 7,30,269 crores.

Objectives of Public Sector
We conclude this section by broadly summarizing the objectives of setting up public enterprises in
India :
(i) To promote rapid economic development through creation and expansion of infrastructure;
(ii) to generate financial resources for development;
(iii) to promote redistribution of income and wealth;
(iv) to create employment opportunities;
(v) to promote balanced regional growth;
(vi) to encourage the development of small scale and ancillary industries; and
(vii) to promote exports on the one side and import substitution, on the other.
The Issues of Public Sector
Some of the financial and accounting issues which have been the subject of public debate, for example
external reporting and monitoring, are common to several parts of the public sector, and these are
dealt with in this book. Some of these are conceptual issues, some practical. Some are related to external
reporting and monitoring, others to internal financial control. But two general questions arise.
The first concerns how specific accounting and control problems should be tackled in a public sector
context. Such problems arise because of the distinctive constitutional, economic and financial features
of public sector bodies. These are bound to affect the way in which their operations are accounted for
and controlled. Areas of special concern include, for example, the accounting treatment of capital
equipment and the need to provide non-financial indicators to supplement financial data because of
the non-profit basis of most parts of the public sector.
The second question, following naturally from the first, is how far should public sector practice relate
to practice in the private sector and in what respects, if any, should it diverge? This question has been
asked about most aspects of financial reporting, including the form of financial statements and the
treatment of individual items in the accounts, such as capital asset valuation and depreciation. The
question is also asked about internal financial and economic issues, such as the use of investment
appraisal techniques and monitoring.

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