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Question

Name the sector whose role has changed considerably in the Indian economy after 1991 and explain any five changes.


Solution

The name of the sector is public sector. The changes in the role of public sector after 1991 are as follows:

1. Reduced number of reserved industries: The Government of India adopted the policy of liberalization and de-licensing thus opening the industries reserved for the public sector to the private sector. Currently, only three industries are reserved for the public sector-atomic energy, defence and railways.

2. Privatisation of public enterprises: To expand the role of the private sector, there is an emphasis on privatisation of public sector enterprises by selling these to the private sector.

3. Dilution of shareholdings: The central government has diluted its share holdings in many government companies through the disinvestment policy to increase the participation of workers of PSEs in the productivity and profitability of these enterprises.

4. Performance improvement through Memorandum of Understanding (MOU): The Government of India has entered into a MOU with many private sector enterprises under which the government has laid performance targets for these enterprises.

5. Revival of sick units: Sick PSUs have been referred to the Board of Industrial and Financial Reconstruction (BIFR) to analyse their financial performance to suggest suitable measures for their revival.

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