Discuss the role of public sector during the post reform period of the Indian Economy?

(Civil Services Exam- 2006)

The role of the public sector has altered during in the neoliberal era after 1991. In the era of liberalization apart from the social objectives, it is envisaged that Public Sector should run on the sound market fundamentals so that they can compete with other players. Economy and efficiency are other two principles which the public sector is expected to inculcate.

Public Sector units in the era of liberalization are expected to compete with others in the ambience of level playing field. Various sectors which in the pre-reform era had the monopoly of the Public Sector are now open for private players. It is expected that Public Sector apart from its traditional social objectives should be competitive. The resources mobilized by them should come from market mechanisms rather than from governmental subsidies and tax payer’s money.

The performing units are also given higher autonomy for the expansion in the liberalized era. Status like Miniratna, Navratna and Maharatna are examples of this.                                            

Disinvestment and privatization of the Public Sector Units are also the mechanisms which the government has leveraged in post reform era to mobilize resources for the social sector and other obligations.