Firstly, to know, The government of India owns 51% or more of the paid-up share capital of PSUs (Public Sector Undertakings), which are government-owned businesses. However, it may only be the federal government, just one state’s state government, or the federal government along with any number of state governments.

History Of These PSUs

After gaining its independence, India had to deal with significant socioeconomic and financial problems brought on by a protracted history of slavery and exploitation, including income inequality, uneven regional economic development, and high unemployment. Additionally, India’s fundamental structure was being crippled by a poor industrial foundation, insufficient investments, a lack of infrastructure, a shortage of human resources who are skilled in new technologies, and other factors.

Public sector development was viewed at this time as a tool for ensuring sustainable and independent economic growth. Therefore, the country adopted a planned strategy for economic development, in which PSUs played a significant role. To achieve its short-term budget deficit and divestment aims, the Indian government has drained the accumulated cash reserves under the guise of special dividends. This yearly financial reserve was intended to be utilised for capital investments and the advancement of technologies.

What’s Happening To Them?

These profitable PSUs are being coerced by the government into taking out a lot of debt and purchasing the whole government ownership in the other loss-making PSUs. To reach the targets for disinvestment, this action was taken. To combat the rising cost of fuel, the government has also urged the oil and gas PSUs to pay the fuel subsidies.

Despite the fact that many PSU products are not of a quality that can be sold, employees and managers continue to report to work each day and go. Additionally, they are being compensated by the government for their lack of productivity because, unlike private enterprises, they are not under any need to create or return more than their initial capital.

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