describe the industrial policy 1991 towards public sector?
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The NIP 1991 emphasized the following measures to reforms the Public sector enterprises:
(i) Reduction in the number of industries reserved for the public sector from 17 to 8 (which was further reduced to 3).
(ii) The policy towards sick Public sector enterprisestobe the same as that for the sick private sector units. But there: was a drastic reduction in the budgetary support to sick or potentially sick public sector enterprise
(iii) An improvement of performance through an MOU (Memorandum of Understanding) system, by which managements would be granted greater Autonomy.
(iv) The disinvestment of shares of selected Public sector enterprise so as to raise resources and to encourage wider participation of the general public and workers in the ownership of public sector enterprises.
The list of industries reserved for the public sector has been drastically pruned. Many critical areas have been opened up for private sector participation.. For instance, electric power generation has been opened up for Private investment and foreign investment. Many governments are actively negotiating with various foreign investors for establishing private sector Power Plants. The hydrocarbon sector, covering Petroleum Exploration, production and refining has also been opened up to the private sector. Air transport and the telecommunication sectors (that is, for certain services like cellular telephones) has also been opened up to the Private sector .OnMay 9, 2001, the Government opened up the arms and ammunition sector also to the private sector. Hence, only three industries are reserved exclusively for the public Sector.
According to the NIP 1991, the sick public sector units were to be treated at par with those in the private sector. The public sector has now been brought within the jurisdiction of the Board for industrial and Financial reconstruction (BIFR) As per the new policy, the BIFR will now decide whether a sick public sector unit can beeffectively restructured orwhether it has in be closed down.
Up to December 2001, 262 cases of public sector units were referred to the BIFR. Out of these, 178 (i.e. 76 Central and 102 State) were registered. Of the registered cases, 33 cases were dismissed as not maintainable, revival schemes Whereas were sanctioned for 39 cases and winding up was recommended in 47 cases (20 central and 27 state). Eleven public sector units (4 Central and 7 State) have already been declared , no longer sick' on successful Completion of the rehabilitation scheme" (Misra, 2002: 497)
the decision to close down the sick public sector units has been resented by the working class as there is an inherent danger of retrenchment. The government has, therefore, setup a National Renewal Fund (NRF). NRF is to be used for retraining and redeployment of retrenched labor as also to provide compensation public center employees seeking voluntary retirement.
The NIP 1991 sought to bring all public sector enterprises under the system Of MOU with a view to improve the relationship between these enterprise and the administrative ministries It gives clear targets be the public sector units and ensure operational autonomy to them so an to achieve those targets. In 1987-88, four public sector units signed MOUs. By 2000-01 the number went up to 107.
In 1997, the government identified 11 public sector enterprises as Navratnasnamely BHELBPCL, GAIL HPCL IOC, IPCL MTNL NTPC ONGC, SAIL and BSNL. It decided to give enhanced powers to their board of directors so as to Facilitate their becoming global players these navratnas were given autonomy and operational freedom in terms of incurring capital expenditure entering into joint ventures effecting organisational restructuring, raising capital ftrom the domestic and international markets, and so on. Financial and operational autonomy was also accorded to some other profit malting public sector enterprises called Miniratnas'. As on March 31, 2001, 46 Enterprises had been categorised as Miniratnas'
Government has decided to withdraw from the industrial sector. In accordance with this decision, it started privatising the public sector enterprises in a phased manner. the Government aimed at bringing down its equity in all non-strategic public sector undertaking to 26 percent or lower and close down those units which cannot be revived. For this purpose, it adopted the route of disinvestment, which involves the sales of the public sector equity to the private server and the public at large. It was felt that this would ensure financial discipline and improve prformance. The disinvestment programme started in 1991-92, the total realisation to the government from various rounds of disinvestment till 2000-01 was Rs. 20,321 crore However the actual realisation from the disinvestment programme has generally been considerably less then the target. For instance, in 2000-01 the government had kept a target of Rs.10,000 corore for its disinvestment programme while it could actually rise only Rs.1869 crore worth of resources.
The table given fellow shows the trends in disinvestment of equity in public sector enterprises for the period of 1991-92 to 2000-01
DISINVESTMENT OF EQUITY IN PUBLIC SECTOR ENTERPRISES
(Rs in crores)
Source:Government of India, Economic Survey, 2001-02, Table 7.6