PUBLIC SECTOR ENTERPRISES IN KERALA AND ITS
IMPORTANCE
Before 1947, the public sector was almost absent in the Indian economy. The only instances
worthy of mention were the Railways, the Posts, and Telegraphs, the Port Trust, the Ordnance
and the Aircraft factories, and a few government-managed undertakings. The Indian
policymakers firmly believed that political independence without economic self-reliance will
have no meaning and therefore Industrial Policy Resolution (IPR) 1956 clearly made a roadmap
for the deliberate enlargement of our public sector. The second 5-year plan also emphasized
the adoption of the socialist pattern of society as the national objective and stated that all
industries of basic and strategic importance should be in the public sector.
IMPORTANCE OF PUBLIC SECTOR ENTERPRISES
Capital Formation and Development of Infrastructure
The public sector laid down the foundation for capital development of the nation as a number
of heavy and capital goods industries were established during the second and third 5-year plans.
Much of the investment via PSUs came through government budget allocation as the public
sector savings were minuscule as compared to the private sector and householder’s savings.
The share of public sector investment has come down from 60% during the third 5-year plan
to 24% during the 11th 5-year plan and 7.5% during 2016–17.2The decline in the share of
public sector investment can be attributed to a fall in public sector savings over the period of
time and the increasing role of the private sector in nation-building for the three decades.
Despite the decline in public sector investments, there is an impressive record of productivity
growth of public sector enterprises that can be corroborated by the declining average capital-
output ratio from 7.0 in 1981–82 to near 4% at present.
Strong Industrial Base
The public sector has successfully built a strong industrial base in the country. The industrial
base of the economy is now considerably strengthened with the development of public sector
industries in various fields like iron and steel, coal, heavy engineering, and more. The share of
IMPORTANCE
Before 1947, the public sector was almost absent in the Indian economy. The only instances
worthy of mention were the Railways, the Posts, and Telegraphs, the Port Trust, the Ordnance
and the Aircraft factories, and a few government-managed undertakings. The Indian
policymakers firmly believed that political independence without economic self-reliance will
have no meaning and therefore Industrial Policy Resolution (IPR) 1956 clearly made a roadmap
for the deliberate enlargement of our public sector. The second 5-year plan also emphasized
the adoption of the socialist pattern of society as the national objective and stated that all
industries of basic and strategic importance should be in the public sector.
IMPORTANCE OF PUBLIC SECTOR ENTERPRISES
Capital Formation and Development of Infrastructure
The public sector laid down the foundation for capital development of the nation as a number
of heavy and capital goods industries were established during the second and third 5-year plans.
Much of the investment via PSUs came through government budget allocation as the public
sector savings were minuscule as compared to the private sector and householder’s savings.
The share of public sector investment has come down from 60% during the third 5-year plan
to 24% during the 11th 5-year plan and 7.5% during 2016–17.2The decline in the share of
public sector investment can be attributed to a fall in public sector savings over the period of
time and the increasing role of the private sector in nation-building for the three decades.
Despite the decline in public sector investments, there is an impressive record of productivity
growth of public sector enterprises that can be corroborated by the declining average capital-
output ratio from 7.0 in 1981–82 to near 4% at present.
Strong Industrial Base
The public sector has successfully built a strong industrial base in the country. The industrial
base of the economy is now considerably strengthened with the development of public sector
industries in various fields like iron and steel, coal, heavy engineering, and more. The share of
