Essay on Public’s Commanding Role and Reasonable Return for Investment


The commanding role, however, assumed a level of efficiency on the part of public sector, which will generate resource, which would be made available to other sectors. However, this did not happen.

On the other hand, there is no doubt in the minds of informed observers of India Economy currently that although the Public Sector has played an important and critical role in economic development of the country all these years, the current benefits from it are not (and have not been) commensurate with the investment made. Its cost of maintenance is high and it is now a net burden on the Economy.

This investment is of the order of about $ 50 to 70 billion. The return on this investment has varied a poor two to five percent in the last few years.


Considering that the investment funds must have come out of saving which are being serviced by the government at about 12 percent, a return of two to five percent would appear to be too paltry to enable servicing of the equity as well as the loan content of the investment adequately. Quite obviously, the government is using budgetary resources (or further savings) to service both equity and debt.

It must be considered fair for any nation to expect a reasonable return from public investment. Consequently, the categorical need for restructuring such investments is clearly unavoidable, based on a closer re-look at their initial objectives, their current structure and their likely future, despite the fact that in the past this was avoided for various reasons of public policy which are no longer valid and, therefore, no longer avoidable in the light of the new policy of plugging the Indian economy into the global market on the premise of its efficiency and competitiveness.

Therefore, there was need on the part of government for both the strategies, i.e., (i) of being able to let go, and (ii) to fashion an administrative interface between itself and the enterprise that optimized their commercial performance by tackling the problems highlighted above.

Imperatives of efficiency under new economic policy


The logic that emerged was that the new objectives of greater ‘efficiency’ and productivity could be achieved by exercising a family of options for the whole portfolio rather than carrying on as before. The two imperatives at work were:

(a)The burden on the budget had risen which required reduction of expenditure on account of PSE’s and simultaneous improvement of their performance, and

(b)The consequences of industrial deregulation and trade liberalisation will be to expose public sector (as well as Indian private sector whose performance was dependent upon the public sector dominated infrastructure) to intense competition and therefore, poor performance on the part of public enterprises would not only be unacceptable but, if allowed to go on, will halt the very reform process.

The obvious conclusion was that performance, in a competitive environment of global dimension, was the key to their existence and, in the light of a logical and humane policy of exit for them through the Board of Industrial Finance Reconstruction (BIFR) route, their existence under all circumstances could not be taken for granted.


The year 1991 was to prove the watershed for economic policy in general and public sector policy in particular.

Web Analytics
Kata Mutiara Kata Kata Mutiara Kata Kata Lucu Kata Mutiara Makanan Sehat Resep Masakan Kata Motivasi obat perangsang wanita