PRIVATE SECTOR ON BOOM,THINK OF PSUs Article Summary
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Published: December 14, 2007
When one talks about the corporate sector in India, most of the times, he talks of private enterprises.Generally, he does not talk about Public Sector Industries(PSUs) while discussing indian corporate sector.Why?The answer is:neither do the cameras of media nor do the analysts hound the CEOs of PSUs, but the chapter of indian corporate can not be written without mentioning the share of PSUs.PSUs like Indian Oil, BHEL,NTPC,SBI and Gail have been dominating the markets largely and have been giving huge turn-overs every year because of their giant sizes and large sales.Till now, it was considered that PSUs are not efficient enough to produce big profits but the results shown by these companies completely reject this common belief. Critics may also give the examples of PSUs like Bharat Petroleum and Indian Oil as the companies which have not been able to produce sufficient enough profits corrosponding to the investments made by the government but they must give a look at the conditions in which these PSUs are in operation. In order to check the effects of the daily- fluctuating prices of oil and petroleum in world-market on the economy,these companies have to bear the brunt .
At the same time the'growth' of the PSUs is also neither appreciable nor satisfactory.According to a survey done by ETIG Database,profit-growth for PSUs was lower at 31% as compared to 43% growth recorded by the top 500 indian companies.This is because of the slow investment planning, its execution, decision- making and limited presence of PSUs in a few large profit -making sectors like telecom services,construction and IT.
Taking in cosideration the total turn-over of PSUs which is more than the total turn-over of the private companies among same 500 companies,the profit-making of PSUs has been,in general, quite lower than the private companies.In whatever sector ,either it is oil & gas or banking,the PSUs maintain a monopoly which developed as a result of setting-up of most of them at a time when private sector was not sufficient enough to invest huge sums, then limiting the competition by the private players in these fields and becoming quiet large players.This made them quiet vulnerable to the competition in the market after the phase of neo-liberalisation especially in the fields like telecom services where speed in decision-making and flexibility in the operations play a vital role.
But, one can expect that making the finances of PSUs public,enlisting of PSUs on extock exchange, reduced role of political ambitions, public-shareholding, market- friendly policies, shedding-off of the monopoly status and fast decision-making can really change the face of the PSUs in India in the upcoming days.
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