By Harshvardhan, the Subject Matter Expert at Edumarz
Solution: In the post– 1990s, the new economic policies, emphasised liberalisation,
privatisation and globalisation. The role of the public sector was redefined. It was not supposed to play a passive role but to actively participate and compete in the market with other private sector companies in the same industry. They were also held accountable for losses and return on investment. If a public sector was making losses continuously, it was referred to the Board for Industrial and Financial Reconstruction (BIFR) for complete overhauling or shut down. Various committees were set up to study the working of inefficient public sector units with reports on how to improve their managerial efficiency and profitability. The role of the public sector is definitely not what was envisaged in the early 1960s or 70s. The Government of India had introduced four major reforms in the public sector in its new industrial policy in 1991.
The main elements of the Government policy are as follows:
- Restructure and revive potentially viable PSUs
- Close down PSUs, which cannot be revived
- Bring down governments equity in all non-strategic PSUs to 26 per cent or lower, if necessary
- Fully protect the interest of workers.