A government-owned enterprise, government-owned corporation, statutory corporation and a nationalised company in India is called a public sector undertaking (PSU) or a public sector enterprise. These establishments are wholly or partly owned by the Government of India or one of the many state or territorial governments or both together in parts. The officers working for these entities and their subsidiaries are gazetted officers. The employees subordinate to the officers working for these respective entities and their subsidiaries are full-fledged government employees. The stock of these establishments are majority-owned by the government in a public sector undertaking. Public sector undertakings are classified as central public sector undertakings (CPSUs, CPSEs) which are wholly or partly owned by Government of India or state level public sector undertakings (SLPSUs, SLPSEs) which are wholly or partly owned by state or territorial governments.
In 1951, there were just 5 enterprises in the public sector in India, but in March 2021 this had increased to 365 which includes 7 new Defense PSUs. These enterprises represented a total investment of about ₹16.41 lakh crore as on 31 March 2019. The total paid-up capital as of 31 March 2019 stood at about ₹2.76 lakh crore. CPSEs have been earned revenue of about ₹25.43 lakh crore during the financial year 2018–19.
Further information: Economic history of India
When India achieved independence in 1947, it was primarily an agrarian entity, with a weak industrial base. There were only eighteen, state owned, Indian Ordnance Factories, previously established to reduce the dependency of the British Indian Army, on imported arms. With the British Raj electing to leave agricultural production, and what little Western aping industrialisation to the Private sector, with commercial Tea processing, Jute mills, of the like the Acland Mill, Railways, Electricity generation, Banks, Coal mines, Steel mills, Civil Engineering funded, and owned by private individuals, of the like of Jamsetji Tata, families, or through Privately owned, and sometimes traded companies, on the likes of the Bombay Stock Exchange. Vocal critiques, of this Western capitalist system, notably the Indian independence movement leading Mahatma Gandhi, instead advocated for a self-sufficient, largely agrarian, communal village based existence, for the population, in the first half of the 20th century. While others criticised the New Delhi, and particularly the Presidencies for not establishing sufficient British Raj funded, Western style Schools, Public Libraries, Universities, Medical Schools, Engineering colleges, Hospitals and Asylums, to permit the rapidly expanding population to replicate Britain's own industrialisation.
Post Independence, the national consensus was in favour of rapid industrialisation of the economy which was seen as the key to economic development, improving living standards and economic sovereignty. Building upon the Bombay Plan, which noted the requirement of government intervention and regulation, the first Industrial Policy Resolution announced in 1948 laid down broad contours of the strategy of industrial development. Subsequently, the Planning Commission was formed by a cabinet resolution in March 1950 and the Industrial (Development and Regulation) Act was enacted in 1951 with the objective of empowering the government to take necessary steps to regulate industrial development.
Prime Minister Jawaharlal Nehru promoted an economic policy based on import substitution industrialisation and advocated a mixed economy. He believed that the establishment of basic and heavy industry was fundamental to the development and modernisation of the Indian economy. India's second five year plan (1956–60) and the Industrial Policy Resolution of 1956 emphasized the development of public sector enterprises to meet Nehru's national industrialisation policy. His vision was carried forward by Dr. V. Krishnamurthy known as the "Father of Public sector undertakings in India". Indian statistician Prasanta Chandra Mahalanobis was instrumental to its formulation, which was subsequently termed the Feldman–Mahalanobis model.
The major consideration for the setting up of PSUs was to accelerate the growth of core sectors of the economy; to serve the equipment needs of strategically important sectors, and to generate employment and income. A large number of "sick units" were taken over from the private sector. Additionally, Indira Gandhi's government nationalised fourteen of India's largest private banks in 1969, and an additional six in 1980. This government-led industrial policy, with corresponding restrictions on private enterprise, was the dominant pattern of Indian economic development until the 1991 Indian economic crisis. After the crisis, the government began dis-investing its ownership of several PSUs to raise capital and privatise companies facing poor financial performance and low efficiency.
Certain public sector undertakings have been awarded additional financial autonomy. These companies are "public sector companies that have comparative advantages", giving them greater autonomy to compete in the global market so as to "support [them] in their drive to become global giants". Financial autonomy was initially awarded to nine PSUs as Navratna status in 1997. Originally, the term Navaratna meant a talisman composed of nine precious gems. Later, this term was adopted in the courts of Gupta emperor Vikramaditya and Mughal emperor Akbar, as the collective name for nine extraordinary courtiers at their respective courts.
In 2010, the Government established the higher Maharatna category, which raises a company's investment ceiling from ₹1,000 crore to ₹5,000 crore. The Maharatna firms can now decide on investments of up to 15 per cent of their net worth in a project while the Navaratna companies could invest up to ₹1,000 crore without explicit government approval. Two categories of Miniratnas afford less extensive financial autonomy.
Guidelines for awarding Ratna status are as follows:
|Maharatna||Navratna||Miniratna Category-I||Miniratna Category-II|
|Eligibility||Three years with an average annual net profit of over ₹2,500 crore, OR
Average annual Net worth of ₹10,000 crore for 3 years, OR Average annual Turnover of ₹20,000 crore for 3 years (against Rs 25,000 crore prescribed earlier)
|A score of 60 (out of 100), based on six parameters which include net profit, net worth, total manpower cost, total cost of production, cost of services, PBDIT (Profit Before Depreciation, Interest and Taxes), capital employed, etc., AND
A company must first be a Miniratna and have 4 independent directors on its board before it can be made a Navratna.
|Have made profits continuously for the last three years or earned a net profit of ₹30 crore or more in one of the three years||Have made profits continuously for the last three years and should have a positive net worth.|
|Benefits for investment||₹1,000 crore – ₹5,000 crore, or free to decide on investments up to 15% of their net worth in a project||up to ₹1,000 crore or 15% of their net worth on a single project or 30% of their net worth in the whole year (not exceeding ₹1,000 crores).||up to ₹500 crore or equal to their net worth, whichever is lower.||up to ₹300 crore or up to 50% of their net worth, whichever is lower.|
PSUs in India are also categorised based on their special non-financial objectives and are registered under Section 8 of Companies Act, 2013 (erstwhile Section 25 of Companies Act, 1956).
|CPSE Name||Net Profit (In ₹ crore)|
|Indian Oil Corporation Ltd.||21,836|
|Coal India Ltd.||16,700|
|Power Grid Corporation of India Ltd.||9,939|
|Bharat Petroleum Corporation Ltd.||7,132|
|Power Finance Corporation Ltd.||6,953|
|Gail (India) Ltd.||6,142|
|Bharat Sanchar Nigam Ltd.||6,040|
|Hindustan Petroleum Corporation Ltd.||6,029|
|CPSE Name||Net Loss (In ₹ crore)|
|Air India Limited||15,475|
|Mahanagar Telephone Nigam Ltd.||3,390|
|State Trading Corporation of India||881|
|Orissa Mineral Development Company Ltd.||452|
|National Textile Corporation Ltd.||315|
|Airline Allied Services Ltd.||297|
|Chennai Petroleum Corporation Ltd.||213|
Main article: List of public sector undertakings in India
Public Sector Units (PSUs) can be classified as Central Public Sector Enterprises (CPSEs), Public Sector Banks (PSBs), or State Level Public Enterprises (SLPEs). CPSEs are administered by the Ministry of Heavy Industries and Public Enterprises. The Department of Public Enterprises (DPE), Ministry of Finance is the nodal department for all the Central Public Sector Enterprises (CPSEs).
As of october 2021, there are 11 Maharatnas, 13 Navratnas and 73 Miniratnas (divided into Category 1 and Category 2).
Miniratna Category-I (61)
Miniratna Category-II (12)
List of Defense PSUs (7)
Main article: Public sector banks in India
Presently there are 13 Nationalised Banks in India (Government Shareholding in %, as of 1 April 2020):
Presently there are 43 Regional Rural Banks in India Since 1 April 2020:
Jammu and Kashmir
Presently there are 7 Nationalised Insurance Companies (Government Shareholding %, as of 1 April 2020):
Presently there are 28 Nationalised Financial Market Exchanges in India (Government Shareholding %, as of 1 April 2020):