Public Sector Undertaking

Author-Bibanshu Mishra

Meaning- Public Sector undertaking also known as PSUs is a body in which more than 50 percent stakes is of government. If the body is owned by the central government then it is known as Central Public Sector Undertaking and if it is owned by the State Government then it is known as State Public Sector Undertaking.

Features of Public Sector Undertaking

·     Ownership of the Government- The government is having more than 50 percent stakes in the body that results in the ownership of the body.

·     Service Motive- The main objective of these bodies is to provide service to the citizens.

·     Finance- The finance provider to these bodies is the government.

·     Accountability– These bodies are accountable to the public who are the taxpayers. The audit of these companies is done by the CAG every year.

Types of Public Sector Undertaking

·     Departmental Undertaking- It is a type of Public Sector Undertaking that is run as a government department and is operated by the ministries.

Some of the Departmental Undertakings are –

(1)  The Indian Post and telegraph department

(2)  The All Indian Radio

(3)  Defence

(4)  Atomic Energy

·     Statutory Cooperation- It is a type of Public Sector Undertaking that are created through the special act of Parliament or State legislature. The Act defines their powers, functions, rules and regulations of governing them. These have a separate legal existence and have to act in their own name. These are backed by the power of government and have considerable flexibility as these are corporate bodies.

Some of the Statutory Cooperation –

1.   Life Insurance Cooperation of India

2.   Reserve Bank of India

3.   Unit Trust of India

4.   ONGC

·     Government Companies- The Companies Act, 2013 defines a Government Company thus- “A Government Company means any company in which not less than 51% of the paid-up capital is held by Central Government or by any State Government or partly by Central Government and partly by one or more State Governments.”

Some of the government companies are –

o   Steel Authority of India Ltd.

o   Hindustan Machine Tools Ltd

o   Bharat Heavy Electricals Ltd

o   Gas Authority of India Ltd


Public Sector Undertakings in India have their own serious problems. But inspite of these difficulties, public sector undertakings are rapidly growing. We find that at the beginning of the First Five Year Plan there were only five units in this sector, with a total investment of Rs. 29 crores. This number rose to 21 at the beginning of the second plan, to 48 in the Third Plan and at the beginning of the Fourth Plan, the number rose to 85. On March 31, 1973, the number of public sector undertakings was 113.

Similarly, there was an increase in total investment made in these undertakings. At the end of the Second Five Year Plan, the total investment made was Rs. 81 crores whereas at the end of the third plan, this investment rose to Rs. 953 crores. According to information collected by the Government, the amount invested as on 31st March 1973 was Rs.5671 crores. Since then investment in this sector has been very rapidly increasing.


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