ling it towards self-sufficiency.
Understandably, during ‘The Nehru
Era,’ from 1950 to 1964, a major chunk
of national investment went into the
public sector, and the primary devel-
opmental focus was on strengthening
basic and heavy industries. There was
also a perceivably socialist turn in the
imagination undergirding India’s devel-
opmental journey, as evidenced by The
Industrial Policy Resolution of 1956. The
key goals of the resolution included:
the promotion of balanced regional
development, generation of surpluses
for development and measures against
the concentration of economic power in
the hands of a few.
The initial success of the Soviet
experiment was an important source of
inspiration during The Nehru Era which
enjoined the idea of the state becoming
an entrepreneurial presence. Not only
did this lead to the state providing cap-
ital to private industry in the absence
of established financial markets, but it
also boosted its political autonomy, as
it remained free from foreign interfer-
ence.
Owing to the economic policies un-
dertaken during The Nehru Era, India’s
economy was showing truly encourag-
ing signs for the first time since the turn
of the 20th century, despite a substantial
increase in the population. Between
1952 and 1965, particularly, the Indian
economy began to grow at a rate of
4.09, while also witnessing a substantial
increase in its per capita income. Fur-
ther, the period also saw the success-
ful reversal of the trend of declining
agriculture that had been crippling the
economy. The Nehru Era, for all intents
and purposes, had left an indelible mark
in the socio-economic advancement of
India, and the PSUs had a major role to
play in it.
In the initial phase of nation build-
ing, public sector undertakings were
restricted mainly to core and strategic
industries. Heavy industry, steel, oil
and gas, and banking and insurance
fell under these categories. It was
during this phase that some of India’s
largest and most successful PSUs were
set up, including Bharat Heavy Elec-
tricals Limited, State Bank of India, Oil
and Natural Gas Corporation Limited,
Indian Oil Corporation, Steel Author-
ity of India Limited, Bharat Electronics
and Oil India. Moreover, India’s first
PSU, Indian Telephone Industries (ITI),
which pioneered the telecommunication
industry and India’s foremost insurance
and investment company Life Insurance
Corporation (LIC), also owe their genesis
to this period.
Later, during the second phase,
between the late 1960s and early
1970s, Indian PSUs began to grow on
an unprecedented scale. It was also
during this period that key events of the
transition, including the nationalization
of banks and the state takeover of ‘sick’
private units (i.e. industrial units that
had been consistently accruing losses)
were initiated.Throughout the 1970s and 80s, PSUs
kept expanding and diversifying further,
thereby becoming a formidable pres-
ence in sectors of national importance
such as power, irrigation, infrastructure,
transportation, healthcare, education,
science and technology and oil and
gas refineries. India’s largest power
company NTPC, India’s apex develop-
mental bank NABARD, Gas Authority of
India Limited (GAIL), the Rashtriya Ispat
Nagam and National Aluminium, were
all set up during this phase of industrial
development. PSUs were considered the
lodestars guiding the Indian economy
towards a period of high and sustain-
able industrial growth, amply aided by
the Five Year Plans, as well as associ-
ated policy and welfare initiatives.
In 1987, the well-known catego-
ries of Maharatnas, Navaratnas and
Miniratnas were introduced to assess
the performance of PSUs by the newly
setup Board of Industrial and Financial
Reconstruction. The Department of Pub-
lic Enterprises confers these titles on
various PSUs, and their respective status
determine the degree of autonomy they
can exercise. As on 26 February, 2018,
eight PSUs have been accorded the
Maharatna status: BHEL, CIL, GAIL, IOC,
ONGC, NTPC, SAIL and BPCL. Navarat-
nas are 16 in number, with the likes of
Hindustan Aeronautics Limited and Oil
India Limited among its ranks. Further,
74 organisations have been recognised
as Miniratnas, in addition to over a 1000
state-level PSUs and municipal public
companies.
Until the liberalization of the Indian
economy in 1991, India’s tightly regu-
lated market was dominated by the
public sector and a few private firms.
However, post-liberalization, several
sectors of the economy were opened
to the private sector, which led to in-
creased competition from private firms,
both domestic and multinational. Not-
withstanding, when the global economy
was experiencing a financial meltdown
in late 2008, five of India’s largest PSUs
continued unaffected and reaped high
revenues. It must be noted here that
during this tumultuous period, the PSUs
admirably buttressed India’s economic
growth.- A MARKETING INITIATIVE•