Public Sector Enterprises: India's Jewel In The Crown
Dalal Street Investment Journal|November 09, 2020
While there is a false notion that public sector enterprises are loss-making business organisations that suffer from an overload of bureaucracy and operational inefficiency, the truth is totally different. Contributing around 13 per cent to India’s GDP in terms of turnover and contributing over ₹3.68 lakh crore to the Indian exchequer through taxes and dividends, PSEs have played a significant role in the development of the country’s demographics across all regions

India has emerged as the fastest growing economy in the world and it is expected to be one of the top three economies in the world in the next 10-15 years, states a report. India’s gross domestic product (GDP) was estimated to be ₹145.65 lakh crore (USD 2.06 trillion) for 2019-20. The country’s GDP is expected to reach USD 5 trillion by FY 2025. The government is taking measures to boost the contribution made by the manufacturing sector with an aim to take it to 25 per cent of the GDP from the current 17 per cent. In October 2020, the International Monetary Fund (IMF) projected a GDP contraction of 10.3 per cent in FY21 for India.

Global growth is projected to be a contraction of 4.4 per cent in the same period. The IMF’s outlook for India is worse than the central bank’s prediction of a 9.5 per cent contraction in FY21. IMF said that India is expected to rebound in 2021 with 8.8 per cent growth. The impact of the corona virus has hit almost every major country, but its adverse effects in India could be high given the inherent complexities. To deal with economic turmoil caused by pandemic, the Government of India announced a stimulus package worth ₹20 lakh crore, which is around 10 per cent of the GDP.

Role of the PSEs

The Indian public sector enterprises (PSEs) were created with the purpose of achieving a socioeconomic balance. Their objectives include maintaining stability in prices and creating benchmark standards for prices of essential items while serving various parameters of economic growth and reducing dependency on other countries for goods and services. PSEs have supported the growth of the Indian economy. PSEs are net contributors to the Indian economy. Contributing around 13 per cent to India’s GDP in terms of turnover and contributing over ₹3.68 lakh crore to the Indian exchequer through taxes and dividends, PSEs have played a significant role in the development of the country’s demographics across all regions. They have shown great strength and sustained the Indian economy during the challenging times of global recession. They have contributed to a high extent to develop the social fabric of the country. PSEs have moved beyond Indian boundaries and are exporting their products globally. They have proved themselves internationally. Out of 57 Indian companies featuring in Forbes 2000 – World’s Biggest Public Companies for the year 2019, 10 are PSEs and out of six Indian companies featuring in the Global Fortune 500 list for the year 2020, three are PSEs.

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