Recently, government announced that it is going for the revival of the two sick Public Sector Undertakings. This article will analyze the underlying facts about the same.
WHICH PSU’S WERE CHOOSEN RECENTLY?
⇒ Hindustan Machine Tools (HMT)
⇒ Hindustan Cables (HC)
WAY OF REVIVAL
⇒ By way of Cash
⇒ Remaining, would be in the form of non-monetary consideration such as waiver of loans and interests on thes Ailing PSU’s
HISTORICAL BACKGROUND OF PSU’S
⇒ In 1947, we had only five firms in the strategic sector.
⇒ After independence & acceptance of five year plan, around 250 PSU’s emerged known as the “temples” of India (said by Nehru)
⇒ Even State Governments were allowed to set up PSU’s.
⇒ Reason for setting up PSU: i) For rapid industrialization ii) For rapid infrastructure building
⇒ Along the lines of Communist state like Russia (USSR at that time).
⇒ Primary motives behind setting up a PSU now has changed to political consideration.
⇒ Many of the important private industries were nationalized and converted to PSU
⇒ Generation of employment and perceived development of backward regions replaced economic considerations for the establishment and spread of PSUs
⇒ They were a huge success at the start due to no competition, government backing, rigid licensing policy, etc.
⇒ Profession management was soon replaced too bureaucratic management with politicians often taking over as the heads of many of these PSUs.