Changing Role of Public Sector
It was expected, at the time of Independence that the public sector undertakings would play a major role in attaining certain objectives of the economy either by direct involvement in business or by acting as a channel. The public sector would construct the backbone for other sectors of the economy and invest in main areas. The private sector had long gestation periods and was unwilling to invest in projects which required heavy investments. The government then took the burden to develop the skeletal/framework facilities and provide for goods and services necessary for the economy. The Indian economy is in a stage of changeover. The Five Year Plans in the beginning stages of development gave a lot of significance to the public sector. In late 90's period, the new economic policies laid emphasis on privatisation, liberalisation, and globalisation. The role of public sector was redefined. It was not supposed to play a passive role but to actively involve and compete in the market with other private sector firms in the same field. They were also held responsible for losses and profits on investment. If a public sector was incurring losses repeatedly, it was referred to the Board for Industrial and Financial Reconstruction (BIFR) for complete renovation or close down. Different committees were set up to learn the functioning of inefficient public sector units with reports on how to bring up their administrative efficiency and profitability. The role of public sector is certainly not what was predicted in the early 60's or 70's.