Page 223 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Unit 18: Issues and Problems of Public Sector

• While the Government has been pushing ahead with more and more public sector undertakings, Notes
there has been considerable criticism about the poor performance and in some cases utter failure
of government undertakings in the country.
• It would, therefore, be appropriate to calculate the rate of return on effective capital employed
and thus not include the capital employed in undertakings under construction or in expansion
or capital work-in-progress.
• Although profit maximisation (or in the case of public enterprises, the generation of surplus)
may not be the sole criterion to judge their performance, yet it cannot be denied that it would be
a folly to ignore it altogether.
• While evaluating the performance of the public sector it is necessary to refer to the gains to the
employees in the form of a steady improvement in their emoluments, provision for housing,
medical care and educational facilities.
• It would be unreasonable to argue that all is well in the public undertakings. There is much
scope for improving the efficiency and working of public sector enterprises.
• Many reports on the working of public sector projects have pointed out that many of the projects
took longer time to complete than was initially envisaged.
• In most public sector enterprises, pricing policies are not rational. They have no declared price
policy, except perhaps that they have some departmental directives and ad hoc piecemeal orders.
• It may be pointed out that the picture of the public sector generally painted by the Federation of
Indian Chambers of Commerce and Industry, Forum of Free Enterprises and such other
organisations is too black.
• To improve the performance of the public sector, the Government of India announced in July
1991 the new Industrial Policy.
18.4 Key-Words

1. Agrarian economy : An economy dominated by agricultural products; a pre-industrial
economy.
2. Privatizations : It can have several meanings. Primarily, it is process of transferring
ownership of a business, enterprise, agency, service or property to the
private sector, either to a business that operates for a profit or to a non-
profit organization. The term can also mean government outsourcing of
services or functions to private firms, e.g. revenue collection, law
enforcement, and prison management
18.5 Review Questions

1. What are the issues of public sector?
2. Discuss the problems of public sector.
3. Discuss the role of public sector.
Answers: Self–Assessment

1. (i)(b) (ii)(b) (iii)(d) (iv)(d)
18.6 Further Readings

1. The Indian Economy; S.K. Ray; Prentic, Hall of India Private Limited
New Delhi - 110001.
2. Indian Economy; Gaurav Datt and Aswani Mahajan; S. Chand and Company
LTD. Ram Nagar, New Delhi-110055.

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