Public Sector Enterprises have been playing a dominant and unique role In lndustnal growth and development of Indian econom!. In order to dismantle the

accumulated problems of unemployment, disparities of rural, urban, ~nter-regionaland lnterciass dlsparltles and technological backwardness and to set up a soclallsnc pattern of society In the country1 establishment of Public Entemrtsdxive been conce~ved
Public t.nterpr~teshaw become the temples of modem lndla2 Thls


the \Ision of

i'andlt Jawaharlal Nehm. who la~d foundat~onfor Modem lndra W~thhls slncere the efforts and ~nltratlves,lndla now has the bas~c strategic industnes ltke Coal, Steel, and M~nerals,Petroleum, Heavy En~neenng, Chemicals, Fertilizers, Pharmaceuticals, etc., base of the world' and has emerged as the major rndu~trial I'ubl~c l.nlerpr~sesHere prwlalmed to*ards galnlng control over the command~ng heights of the natlon and for promonng cntical developments in terms of







'I nvedi, Pnajapau, "Publ~cEnterpnses in lnha If not Profit then for What9", Economic and Politrcal Weekly, Vol 1, No 48, November 29, 1986 'lndrasena Reddy, P , "Performance Appmsal In Publlc Enterpnses Through Value Added Approach, The Journal of Inshtute of Publ~c Enterprises, Vol 18 (3 & 4), Apnl-June, 1994, p 164
3~umaramangalam, S Mohan. "Public Sector Tomorrow", Mainstream. May 1987. p. 13 Yesterday, Today and

social gain and strategc value and to generate cornmercral resources for capital formatron Besldes, they are considered as powerful instrument$ of b n n ~ n g b u t a

soclo-economlc transformatron In our country On the contrary to the expectatrons, the performance of mo5t Publrc Sector 'nterprlses ha5 been a below the planned targets Many enterprises have accumulated deficlts over a penod of trme causlng conslderable dram on the cxchequer4 Thrs trend has attracted the attention of policy makers. politrr~dns, bureaucrats, academicrans, researchers and the publrc to find out the reasons for such
\hen fall In performance not onlv agalnst the stated objectives but also thelr

stand o n adoptrng sound wmmercral pnnclplcs of viablllty Thus. there 1s a conslderable nccd to c\arnlne and dnalyse the operat~onalaspect\ of select Publ~c Sector Fnterpnses whi~h dominate the entrre lndustnal base of our country


At the tlme of Independence, lndla was basically an agricultural economy

with weah industrial base, low levels of savrngs and Investment and lacks rnfrastructure

A vast majortty of populat~onwas extremely poor. There were considerable inequalities

in Income. employment opponunltles were low, senous reg~onal lmbalances were noticeable In LTonomic attainments It was felt obvlous that if thc .ouiiti?. ~ i i to sp..d s up
11s ccullLmlc

growlh and malntain

11 In

the long run dl a stead\ le\rl, a big 'push' \nth

State lnltlativc as an essentral pre-requ~s~te" '~enkatachalam, C., Financing of Publrc Entemnses in lnd~a, Himalay Publishing House, Bombay. 1986. p. I. ' ~ a k m i Narain, Principles and Practice of Publlc Enternrise Manapement. S.Chand and Company Limited, New Delhi, 1994. p 32

Besides, the Industrial Policy Resolution, 1948 laid down that the manufacture of arms and ammunition, the production and control of Atomic energy and ownership and management of Railway Transport should be In the exclusive monopoly of the Central Government By doing so, it has sown the seeds for the grow h of Public sector6
I he Const~tut~on Indla, adopted on 26U' January 1950, directs the State of

as per Artlcle of 39(b) and (c) to secure "that the ownersh~p and control of the matenal resource\ of the community are so d~stnhuted best to subserve the common good" and a\ 'that system does not result In the

of wealth and means of product~onto

the common detriment'. Attainment of these objectives I'ubl~cScctclr t ntemnsr.5'

fundamental to the growth of


First Five Year Plan (1951-S6)

I he Flrst Five year plan presented to the government bv the Plann~ng
C o m m ~ \ \ ~ oIn December, 1952 lndlcated the need for "a raprd n

of the

cconomlc and social re%pons~b~l~ties State to satlsfv the legt~mate of the expectabons of thc people
I he (~overnmentand rulers were real~sedthat these would he achleved

through the c\tabl~shment l'ubl~c Sector of of Owing to the small size of the First Plan, insuffic~ency funds ' ~ p a w a l . A N.. H.O. Vanna and R.C Gupta India - Economlc Lnformation Year Book. National Publishing House, New Delh~.1989, 9.279.

7m.. p32

and greater urgency of agricultural development because of serious shortage of food and industrial raw materials, the First plan did not make any big provision for industrial development However, 11 a ~ m e dat budding up the bas~cservices like Power and

Irrigation so that lndustnalisat~onmay be facilitated ' f i e Public Sector outlav on p w e r . transport communicat~onand ~ndustrywere Rs.260 crores, Rs.520 crores and Rs.120 crores respect~vc~y~ I>ur~ng plan penod, several new products came to be manufactured thls for the fir\t tlmc A numher of ne\s ~ndustnes icere establ~shed for example Petroleum retinaw, S h ~ p bu~ld~ng. Manufacture of A~rcraft, Rallwav wagons, Penc~ll~n D D T and However the temp) of ~nduztnallzat~on dunng the F~rst plan was \lo\\


Second Five Year Plan (19%-61) Ihe Second F ~ v eyear plan enb~sagedthe Publ~ck t o r In accordance

w t h the Soc~allctpattern ot soclety as the g u ~ d ~ n g pol~t~cal ph~lowphy Further, the Publ~cSector

expected to work as an Instrument for chechlng



economlc power9 Bes~dec, Second plan has been huly called the ~ndusmal the plan It aimed at lavlng the ven foundat~on industrial development in the countn b\ bu~ldlng of
3 numher

ot Inq-JOrtant lleavv and Bas~c ~nd-tnes

The Publ~c Sector outlav allocated to Ihc actual In\estmcnt In the Publlc

~ndu\trlalwcror \\a\ In lhC order ot Ks 1080 crores

Sector on organ~sed lndutry waz edlmated at Rs 870 crores


- --



- -

' ~ l a n n ~ nCornmiss~on. g "Second Five Year Plan: A Draft Outline, 1956, p.93 9 ~ C h a l a m ,F~nanc~ng. Publ~cE n t e m s e s In Lnd~a, H~malaya Publ~sh~ng of I-louse, Bombay, 1988, p 3

1991.3 Third Five Year Plan (1961-66) The plan emphas17ed on the "rap~ddevelopment of Publ~cSector" to \ c n e a tho-fold oblect~ves removlng certa~n of base d e f i c ~ e n ~ Inethe economlc ~nfra~ \ \tructure and reduce the scope for accumulat~onof wealth and ~ ~ o w ofhmonopol~st~c t tendencies In prlvate hands1' The raisoo d' etre ot such an rxpanslon of Publlc Sector could be found In the followng statement of the then lnd~anPnme Mln~ster. Cement and Fert~ll~ers taken place In short. R h ~ l a ~ Durgapur steel plants Hec~des. to promote cntlcal development In terms of soc~al galn and \tratcglc balue rather than pr~manl)on cons~derat~on profits and to problde of commcrc~al~ u r p l u ~ ~ \ ~ nhlchh to finance further cconornlc d e i e ~ o ~ m c n t ~ ~ e t The Publlc sector outlav on ~ndusmal de\elopment was Rs 1970 crores of whlch the Investment component was around Rs 1700 crores The Private sector s Investment during t h ~ plan penod was about Rs 1300 crores Substantla1 "lb~d . Bombay. Rourkela. p 9 " ~ a g a d ~ sPrakash and Nageshwara Rao."We advocate publ~csector for three reasons to galn control over the command~ng helghts of the economy. apprec~able and expanslon of heavy tndustrles l ~ k e Heavy Englneenng.3.late Smt lnd~raGandh~. p 62 . Adm~n~stratlon Publ~c h of Entcmnses In w a . the Second plan could be regarded as the first has long-term planned ~n~tlatlve the Publlc Sector to bu~ld up the base for the of ~ndu\tr~al~\atton country of the 1. Mach~ne tool\.A spectacular ach~evement of the Second plan was the remarkable expanslon of Iron and Steel Industry through the senlng up of three huge Steel plants In an Publ~c Sector. H~malaya Publ~sh~ng House. Chem~cal. v17.

a vast base for future industnal~sation emerged as a result of the completion of projects In areas of Heavy mach~nes. the plan envisaged for Puhl~cSector "as the domlnant and effectlvc area of the economy so that 11 may take charge of the commandmg heights in the production and distribution of basic consumer goods12. Moreover. In short. However.250 crores. Planning Comm~ss~on. petroleum products. chemtcals and metals. ~t ha l a d panlcular stress on the development of lndustnes In the backward reglons and preventing further concentration on industrial act~vity However.3. Paper machinery. The actual I2 Government of India.des~gnand enyneenng skills and to reduce the Import of fore~bmtrchnolog~es Besldes. 134.3. the progress in several crucial sectors wa5 far from satisfactory In case of special steels. Coal mining machinery. Steel making machinery. Delhi. p. aluminum and ferttllzers.~t has proposed for faster expanston of ~ndustnesproduc~ng It IS cap~talequipment.4 Fourth Five Year Plan The Fourth plan emphastsed the need for achievement of self-reliance tn Industry Accord~ngly.additions to capacity were made for the manufacture of Machine tools.Heavy chemicals and Steel and the annual growth rate of industrial output waz in the v~cinity of clght per cent 1.630 crores and Private Sector investment during this plan period was Rs 2. Vol. 1. during Third Plan. the plan targets were fulfilled with a Public Sector's outlay Rs. also aimed at devclop~ng~ndtgenoustechnolog~es. Draft Filth Five Year Plan 1974-79. 6 . Cement maclunery and Cotton machinery during this plan period.

II Raprd dlverslficatlon and development of lndustrlal expons. rt IS planned to Invest substantially In lndustrlal sector so that the country becomes self-sufficient and to have self-sustained gowth Also.Job Generatron a Dat Challenge". The annual growth rate was hardly five per cent as against the plan target of elght per cent 1.989 crores worklng out to 22 8 per cent productron I The plan envisaged the follow~ngpanern of Investment and Rapld gowth of the core sector slnce thev were v~talfor sustained growth on a long-term bass (Accordingly. nonferrous metals. hlgh pnonty was attached to expansion In steel. mineral 011s. The Econom~c Tlmes. Sugar. femllzen. Edlhle oils.3. - '3Government of Inda. However. Vol VII. the plan focussed or the henerrnent of econom~callyweaker sectrons of society.426 crores of whlch the share of the Publlc Sector was Rs 8. 1980. No 160. p 89 7 . the actual rate achieved was 5 2 per cent per annum.5 Fifth Five Year Plan (1974 -79) The Fifth plan assrgned a very Important place to the development of plan lndustrles with a vlew to achlevlng self-rellance and soc~al just~ce Dunng t h ~ s pclrod. September 2. so that the gap between the nch and the poor IS narrowed down The total expendrture under the Fifth plan amounts to Rs 39. coal and rnactune burldlng). Suh5tantlal Increase In the production of mass consumption goods Ilke Cloth.performance during the plan was however disappointing. and III IV Restram on the producuon of non-essenaal goods llke luxunes and comforts l3 The average rate of indusmal growth dunng this plan was targeted at 8 1 per cent per annum. Eletctncals. " r f Slxth Flve Year Plan .

002 crores which comes to 13. production s t a n d picking up but it has also created certain ~stortions". ~ n d ~ t n have tended to get established at subes optimal capacltles lead~ng a hlgh cost of mdustnal structure to In the light of the above. on Government pf Publlc Sector Entenmses. enhancement of manufactunng capacity. the dlversificat~onof mdustrial structure covering broadly the entire range of consumer. The p e r i d Slit11 plan saw tht. The d As a result. ieni. I4 Rewrt of the Economic Adminishative Reforms Commission. the Sixth plan has emphasized on optimum utilisation of exlstlng capacities and Improvements In productivity. More Important than thi! quantitative Incraw In output.09.7 F.6 Sixth Five Year Plan (1980-85) While making a review of industrial development over the thlrty years of planning. The successwe plans have stressed the increasing role of Publ~c Sector In the removal of unemployment and under-employment and enhance the standard of llv~ng through the provlslon and distribution of essential commodities and prov~dinginfrastructural fac~llties However. IS commendable.292 crores proposed under this Plan.U.. d~spersalof industry. Improvement in energy efficiency. the share of Publ~c Sector was marked at Rs 15. New Delhi. Industrial industrial and trade policies were substantially Ilberallsed. Of the total expcnd~tureof Rs 1. the Slxth plan noted that industrial production had increased by about five tlmes. 1985 . B P E. the pattern of industrial development was not sufficiently gu~dedhv cost cons~deratlons Most. intermediate and cap~tal goods. specla1 attenoon to the caprtal goods ~ndustryand electronics industry. ~ ~ rangeeof changes In the lndustr~alpol~cyof the government. such alike.

R ~ J I V ' government had marked new thrust towards liberalisat~ons. 1994. p 601 . inter aha through S large scale delicenslng. broad bandcng of industries which remained within the ambit of licensing and h~gher endorsements for capactty expansion. Pun. oil exploration.The role of Public Sector is also clearly stated in the industrial policy of 1980 with a major stress on the o@murn ut~lisationof installed industrial capacity. ~ l s hand V. Bombay. 1996. This target was sought to be achreved through the increase in efficiency. The fields like telecomcnunccat!on. I d a n Economv. S. o ~ l refinery and c~vcl avcarion. New Delhi. p.K. ra l-limalaya Publishing House. ~ . productivity and upgradation of '"inarain.37. reduction in production.7 Seventh Five Year Plan (l98S-90) I he Sevcnth five year plan has re-emphas~sedthe need for restructunng the Public i nterpnres and stressed on then consol~dahon. now t h r o w open to thc Pnvate sector'" 1. 1956. lmprobement and IS rncdemcutlon rather than on large scale expansion of capaclty except when ~t crnperatnr I he plan justified Pr~vareenterpnxs' growth bb stating that the cndusmal economy vlsualcsed in the Industrial Pollcy Resolution.708 crores was expected to be invested In the Public sector to promote industrial development. I 6 s S . which were csclusivcl!: rcscrved for the Publlc Sector. Its Develooment Ex~erience. Publlc Enterprise Mmxuement. development of the export orientation and import substitution industnes and also to establ~shthe industnes whlch reduce the r:gional imbalances.Chand and Company L~mited.3. 1s charactensed by a svmbol~c complementary relatconsh~p e e n the Publlc and Pnvate sectorI6 and b The Seventh plan has envisaged for an annual growth rate of 8 7 per cent of industrcai productcon The lotal investment of Rs 19.

of I Publ~c enterpnses to focus on It rs heartemng to note that the Seventh plan 1s deemed to have achieved the targeted lndustnal growth rate of 8 5 per cent It has been made possrble because of adequate ~nfrastructure pollcles of the govemmentI7 lndustr~alPol~cy Statement of 1991 IS a total reversal of the ex~stence of Publ~cSector In lndla The statement adrnltted that many Publ~centerpnses have become burden rather than the assets to the government and therefore. 1985-90. July 167.Draft Seventh Flve Year Plan. h~gh-tech essential infrastructure Items. Plannlng Comm~ss~on. The Economic and Tlmes of lnd~a. Vol I . the government has to adopt a new approach to P u b l ~ ~ enterprises In the new economlc scenano The SIX dlrnenc~on approaches were suggested These ~nclude. Delh~.ind~ng( h l 0 I 1 ) and VI The (iovernment should ensure that the Publlc enterpnses are run on bus~ness lines as envlsaged In the lndustnal Pollcy Resolution of 1956 " "L Naraln. and Chron~callvs ~ c hPublic cnterprlses to be referred to the Board of lndustnal and flrlanclal Recon\tructlon II (RIFR) wh~ch w ~ l l suggtsl rcmedle5 for :he11 rehabllltatlon or recommend for closure III A part of the Publlc enterpnses' equlty be offered to Mutual funds Flnanc~al lnstltutlon general Puhl~c Emplovees and IV Publ~cFnterpnses Boards to be made more professional and be autonomk and power given greater v Performance for improvement to be secured through the Memorandum Of I lnJcr\l. "New Econom~cPol~cy Publlc Sector Reforms". p 136 . 1992 I8 Government of Ind~a.

4 I.'. the thrust of new economtc pol~cyIS towards creatlng a more COmpetlhVe environment In the economy a a means to Improve the product~v~ty s and eflic~encyof the Publlc sector and generates the necessary surpluses as was ongnally envrsaged If 1s only an eftic~ent Publ~c enterpnce system that can enable the (iovemment to meet ~ t soc~al s ohl~gat~on" Moreover.3. ~ndustnalgrowth rate has sharply of picked up to 8 0 per cent in the rest of the plan period. Raj~v Gandhi's Govemment brought out a sea change in terms of liberalisatjon ofllcensing policy in favour of large - . during 1992-93 hac and 1993-94. the Eighth plan env~sageda annual growth rate of 8. the ~ m p recession However.sector can move In The problem affl~ct~ng Publ~centerprises IS strategic. the Industrial growth rates fell short of the targeted ~ ~ o wrate It was due th to the factors like.IBERAI.August . 1992 m. h~ghtech and essent~al ~nfrastructurewll be squarely addressed wth a vlew to maklng the sector strong and more dynamlc Bewdes.8 Eighth Five Year Plan (199297) The E~ghthplan IS all set for managtng the trans~tlon from centrally The plan alms at roll~ngback the Pubi~c planned economy to market-led ewnomy sector Investment from those sectors of the economy where the pnvat. "Econornlcs Framework of the E~gthPlan.ISKI'IONS AND PUBLIC SECI'OR POLICY The change in economic policy of the Govemment has brought new challenges before the Public Sector Enterprises in India.1. 15. 1.- -- - - - - C Rmgarajan.0 per cent In industr~alprcduct~on The first year of this plan has rr~tncsscd2 3 per cent growth wh~ch ~ncreasedto 4 1 per cent In the second year of the plan Thus.

S Chand and Company . In terms of maklng them free from the provlslons of MRTP Act and FERA Thls attltude of the government has created new awakenings on Sector Enterpnses whlch are expected to fulfill the~r objectives on management of Publ~c par w t h Pnvate Sector Enterpnses Different new approaches were pursued by the government dunng late 1980sZ0 The Industrial Pollcy announced by the Congress (I) Rao. p 171 New Some Management Issues'. the government wII strengthen those publlc enterpnses whtch fall tn the reserved areas of operation or In hlgh pnonty areasor generating good ~ r l drc.the new pollcy also marked s~qlficant departure from the trad~t~onal command approach to Publlc Sector Pol~cy and redefined 11s o b j ~ ~ t l v e one whlch will ~nducegreater effic~ency. on 24" July 1991 marked a s~gn~ficant departure government. "Llberallsatlon and Modernity MDI Management Journal. there are a large number of chmnlcally slck publlc " ~ r a n o m a Ray. K P M . lndlan Ecnomy.~m~tcd. January 1993 " ~ u d d a r Dan and Sundaram. Vol6. No 1. led by Mr Naras~mha from the concept of a command economy towards a market dnven economy In wh~ch liberal market based economlc pollcles were cons~deredas the major stlmul~l~kelyto hoost the development of the lnd~aneconomy Bes~des. particularly. 1998. Delhl..isonahlc prolit\ Such enterprise\ v.busmess houses. l.productlvlty and as competltlrenes\ In the Publlc Sector 7'hl~pollcv a~mcd to shed the load of the Publ~centerpnses whlch have showm a very low rate of return or lncumng losses over the years Therefore the government has adopted a new approach to Publlc enterpnxs Units wh~ch may be faltering at present but are potentially v~able must be restructured and glven a new lease of l~fe" Further.111 hc prov~ded much greater degree a Memorandom Of ljnderstandlngs of management autonomy through the system of (MOUs) At the same tlme.

financial Instltutlons.5 OBJECTIVES OF PUBI. and IV There would be a greater thrust on performance improvement through the MOUs 1. ill. 111 In order to ralse resources and-encourage wder publ~cpanlclpatlon. Promote redistribution of income and wealth: . operating in a competitive market and serving little on no public incurring heavy losses. il. In order to make these units to become more viable. general publlc and worken. hlgh-tech and essenbal ~nfrastructure.IC SECTOR ENTERPRISES IY INDIA Although no specific objective IS la~d down on a 'wh~tepaper' or on a natlonal document. Portfolio of Public Sector Investment wll be revlewed with a vlew to re-focus the Public Sector on strategic. a part of the government's share holdlng In the Publlc sector would be offered to mutual funds. F m return on investment and thus generate resources for development. one can gather together a set of ohjectlvez of the Publlc Sector from ofiiclal documents irom tlme to hme az tolln\\s I I he pnnclpal Objectl~c5 Puhllc enterpnxs are of Help In the rapid economic growth and ~ndustrial~sation the country and create of the necessary ~nfrastructurefor economic development. the following measures have been suggested: i. II Publlc enterprises whlch are chronically stck and are l~kelyto be tumed around would for the formulatron of appropnate revlval or rehab~l~tatlon schemes be referred to the Board for lndusmal and Flnanclal Reconstruchon (BIFR).

o: nods The phcnorncnal Increase o f the s1c. Assist in the development of small scale and ancillary indastr~es.6.e and Investment In t h ~ s sector can be observed In the Table I 1 The number of enterprises has ~ncreasedfrom a mere F~ve companies In 19. The investment In the Public sector over the years has grown at an annual Compound Growth Kate (CGR) of 28 26 per cent dunng forty-five year period. the government of lndia has !T made huge Investments In the Publ~c Sector cY.64. v.iv. total investment has also recorded a steep nse from a meagre amount of Rs.c: diKcrcn! . S~milarly.IC SECTOR ENTERPRISES IN LNDIA Publlc Sector In lnd~ahas been cntlclsed vehemently by a number of \upporter\ of the Pnvate Sector who have chosen to shut thelr eyes towards the achle~ements the Publrc sector Followng descnpt~on sufficrent to conwnce one of be that Publ~c sector has played slbmlficant and a defin~te s ~ t ~ role In the economy p ve 1. for obvious reasons. its spectacular .1 Sim and lnvestment In order to achleve the stated objectrves. and vi. Moreover.332 crores during the same period. vii Promote import substitutions.29 crores to a huee amount of a little over Rs. and earn foreign exchange for the economy These objectives.6 PROGRESS MADE BY PUB1. Create employment opportunities.51 to as many as 243 companies In 1995-96. Promote balanced regional development. have undergone changes over a period of trme 1.

CGR : Compound Growth Rate Source: Bureau of Public Enterprises. Public Enterurises Survey. Chapter 1 . New Delhi. Government of India.1 Growth of Investment and Size in Central Public Sector Enterprises Since Independence 1 ! Year 11 I Total l l n i a (in Nos) 1 I Total lovestment (Rs. 1995-96.Table 1. Wnistry of Industry. I .I n Crores) I Growth Rate (in Percentage) . Vol.

aeronautics.growth in size of investment has diversified into vmous fields of activity. bas~cdrugs and chemicals. Public sector has created the infrastructure base for modem industrial economy and has helped the economy in achieving a very large measure of self-sufficienc!~ In the matter of industrial equipment and mach~nery. Instruments and of activities other commerc~al 1..designing of power equipment. manufacturing of heavy machinery. it could be noticed that Pcb!:c e-!cTrxes have reduced the emplovment mzrgnallv since 1990-91 due to the lntroductlon new economic pollcle.6. Desp~teot thew new trends. raw materials. Public Sector has saved the mlllions of population trom the problem of unemplosment and mlsery and of helped in the stab~lisation lndustnal productron . mining of coal and minerals. as many as 30 51 lakh? of persons are emploved in Public Sector Enterpnses receiwng an average emoluments of Rs 105. extraction and refin~ng crude oil.983 per annum The achievement wwthln nineteen years appear significant However. only 15 05 lakhs were in e m p l o ~ e n twith an average emolument of Rs 8. making of steel.879 per annum When these figures are compared to that of the 1975-76 figures.2 Generation o f Employment Puhl~c enterprise have a hignlticant place In Indian economy as they have been generating and problding emplovment to \arious categone? of people lahle 1 2 it From the can tw stated that bv 1995-96. machlne tools.

Mlnlstq of Indusm.Table 1. 1995-96.2 Generation of Employment and Average Annual Per Capita Emoluments in Public Sector Enterprises Year I Employment in Lakhs of Workers 1 I I 1 Average Annual Per Capita Emoluments (in RB. Publlc Entemses Survey. New Delh~. Chapter I CGR I 20 51 1 69 1 102879 1 1 59 I 1 I I . Vol 1. Government of lnd~a.) 1995-96 --_l_______ L CGR : Compound Growth Kate Source: Bureau of Publ~c Entepses.

these two resources have contnbuted 81. The phenomenal growth is due to record nse In corporate taxes and dividends Though the growth rates In exclse and tax are low.can be observed from the Table 1.4 Contribution to Exports Another slplficant achievements of Publlc Sector Enterprises pertans to the~rrole In foreign trade and the~r contnbut~onIn earnlngs from foreign exchange for the country As far as f o r e ~ g exchange earnlngs are concerned.096 crores by 1996-97 a.17 per cent per annum from Rs 1. and Through trad~ngand marketing servlces of the undertakings through wh~chthe exports are canalised ill .3 Contribution to Exchequer The Public Sector enterprises have been making cons~derablt: contribution to the central exchequer by way of dividends.196 crores to Rs. sales tax. corporate tax.25 per cent of the total contribution made by the Public Sector to the government 1.1. excise duties and customs and other duties.32. Their contribution to the central exchequer on the whole ~ncreasedat the rate of 2 1.6. the Public Sector has contnbuted In three ways i II Through d~rect export of Items produced in the Public Sector Through servlces rendered by the Publlc Sector undertakings.3.6.

1995-96. of Government of Indla. 4117 I -- 14 58 I28l 1 C G R : Compound Growth Rate Source: Bureau of Publrc Enterprises. Vol I . Publrc Entemnses Survey.Table U Contribution to Public Exchequer by the Public Sector Enterprises in India 1 19x1-XL 1982-87 IOU I 579 928 1240 1 I IT ' 2558 2667 3454 3407 / I 1321 1827 1727 2837 3753 4567 5537 6554 7670 9061 1 1 / 1 1983-84 1984-85 1986-87 1 133 176 191 I 1190 lo00 .- 1 1683 . New Delhr. I i I . M~nlstry Industry. Chapter I 13 82 -.

1 1.34 45 3 31 6 03 17 14 10 12 1 1 31 26 73 15 13 r 1 -- -- .326 crores in 1995-96 whlch constituted roughly 43 per cent of the total ~ndustnalexports Thus.Chapter I Government of Ind~a. Vol I .The Public Seclor Enterpnses' export earnings are depicted in Table 1.1640 crores In 1975-76 to Rs.I090 17 40 4 30 1 5 90 24 30 72 60 16 53 5 41 . The earnings of the Public enterprrses from exports have substantially rose from Rs.4. New Delh~.. M~nlstryof Industry. . the Public Sector enterprises have today cc me to share of the total exports command a very substant~al Table 1.4 Export Earnings of Public Sector Enterprises I r --- 1 I Exports of Public Enterprises (Rupees in Lakhs) Percentage Growth Over The Previous t e a r I I 1975-76 l Y7h-77 1977-78 1978-79 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1986-87 1988-88 1988-89 1989-90 1990-91 199 1-92 1C9Z-93 1993-94 1994-95 1995-96 CGR . Publ~c Entemnses Survey. 15 06 - CCR : Compound Growth Rate Source: Bweau of Publlc Enterpnses. 1995-96.-- I I I I I 1640 00 1753 00 1562 00 1834 00 1913 00 221700 2756 00 4747 20 5512 10 583 1 45 3822 32 3941 78 417648 489222 6367 84 7085 82 8979 78 10338 02 11935 52 11326 18 11 05 -. I I 42 50 6 90 .

- '2~overnmentof I n d ~ a Econom~c Survev.6 Development of infrastructure Econom~c Development in any underdeveloped country depends on infrastructure W~thout sufic~ent doses of ~nvestment~nexpansion power and energy. Seventh plan reduced the share of Publlc Sector Investment ro below 50 per the cent and kept at 47 8 per cent compared to 52 2 per cent for the Pnvate Sector At the same tlme. -- . per cent was In the Publlc Sector and the remalnlng In the Pnvate Sector 54 The share of Publ~c Sector enhanced to 60 per cent In the Th~rd Plan The Fourth. pp S 6 & S 7 21 . the publ~c of sector's wing was 18 6 per cent of t h ~ total GDS and ~t s 1s declined to 10 8 per cent dunng the perlod of the Seventh Plan Another element of contnbutlon of Publ~c Sector to ewnomlc development IS ~ t role ~ntotal Gross Domest~c s Capltal Forrnat~on (GDCF) whlch has gone up from about 40 per cent dunng 1970-75 to about 52 p r cent dunng the Seventh plan penod22 Hence. Fifth and S ~ x t h plans env~saged respectively 59 per cent. 57 6 per cent and 53 per cent share In Publ~cSector of total plan Investment However. Statement 1-4. the Puhllc Sector financ~allnstltutlons have plaved an Important role In collecting savlngs and mobll~satlon resources The share of Puhllc Sector In Gross Domestlc Sa\lng\ iGIlS) wa\ 16 2 per cent d u n g 1980-8I .1. for the first tlme slnce the advent of plann~ng. 1994-95.5 Public Sector And Capital Formation The role of Publlc Sector ~ncollecting savlngs and lnvestlng them dunng and the planned era has been very ~mportant Dunng the F~rst Second plans of the total ~nvestment.6. 7 3 per cent ~n 1992-93 and 6 9 per cent ~n 1995-95 Dunng the per~od Sixth plan. the Publlc Sector has played tbrmat~on ofthe count5 tbr the past five decades a postll\r: role for the cap~tal L6.

as the state could enforce a large wale mobilisation of capital. the Private Sector neither showed any inchnation to develop itself nor d ~ d has any resources to make this 11 possible It was comparatively shy both financially and technically and was incapable of establishing a heavy Industry immediately. 1991. the co-ord~natlovof ~ndustnalconstruction and tralnlng The Publlc Sector has not only lrnproved the road. all U R. a major p r o m o n of Public %stor investment has been drected towards backward states and backward regions of the country For instance. Calcutta and Chennat (Madras) All other pails 01' thc count9 lagged far behlnd Through the Inlnatlon of the Plannlng Commlsslon In the country by 1951. After Independence. the process of industrialisation cannot be sustained. and basic and heavy indushies. much of the industrial progress of the countN was llmited In and around the port towns like Mlimbai (Bombav).Transportation and Communication facilities. the Publlc Sector has enabled the economy to develop a strong infrastructure for the further economic growth.877 .overnment of lndia tned to use 11s power of senlng up of newer industries as a means of removing regional dlspanties in industrial development. but also expanded them in manlfold l'hus. the Government of lndia has pad pamcular anentlon to thls problem and has set up industries in a number of areas hitherto neglected by the Private Sector.7 . 1. Economic and Political Weekly. ra~l. At the same tlme.alr and sea transport system.4ehicvcment of Balanced Regional Development The (. "Public Sector Performance In the Eighties". In the pre-Independence period. This has forced the state's participation in ~ndustnal~sat~on essential. lndia had inherited an undeveloped basic infrastructure from the colonial period. private sector also has benefited immensely from these projects undertaken by tht: Public ~cctor". Thus. December 14. p.Nagaraj.6.

the four major steel plans In the Publ~c Sector. Bharat ElecbPn~cs L~m~ted (BEL). -. 0 1and Natural Gas 1 1 Comm~ss~on (ONGC).1rnlted (BEL). State Trad~ng Corporat~on(STC) and Metals and Mnerals TraQng Corpomhons (MMTC) were establ~shed t h ~ purpose for s . aircraft. 1994-94. Government of ind~a. such ~ndustnesthat help In all Import subst~tut~on of crucial Importance for the economy are The establ~shmentof 1. Vol 1. Bh~lat Steel Plant. several Publ~cSector Enterpnses have also played a v~talrole In expand~ng exports of the country The H~ndustan the Steel L ~ m ~ t e d (HSL).- . Rourkela Steel Plant. Hlndustan Mach~neTools Ltm~ted (HMT). such allkc in backward areas" 1.etc In the Publlc Sector I S of spec~al Importance from t h ~ s polnt of V l P W Moreover. . were set up In the backward States Further. Durgapur Steel Plant and Rokaro Steel Plant. Hlndustan Bharat Heavy blectncals Ltmtted (BHEL). "Public Enterpnses Survey". these conslderatlons also y ~ d e d locat~on the of machinery and machlne tools factones. Bharat Electron~cs Ant~b~otlcs L~m~ted (HAL). 4 - - -- I3ureau of Publ~c Enterpnses. transport equipment and fert~l~ser plants.2 . p 10 Industry. M~n~strv of New Delh~.8 Import Substitution and Export Promotion Ava~lab~l~ty fore~gnexchange reserves often emerged as a senous of constra~nton the programmes of ~ndustnal~sat~on a develop~ngeconom! In Ihr constraint appeared In a rather strong way In lnd~adurlng the Second plan and the subsequent plans On account of these cons~derat~ons. ~t 1s bel~evedthat the senlng up of large scale Publ~cSector projects In the backward areas would unlash a propuls~vemechan~sm 111 them and cause economlc development of the hlnder-land Hence. Inman 0 1 Corporat~on (10C).6. namely.

1986.1. reduction In dlsparittes of Income. Y.6.9 Development of Ancillary and Small Scale Industries An important constituent of governments' industrial policy the IS development of small scale and anctllary ~ndustnes help the achtevement ot soc~oto economlL ohlecttve\ such as generatlon of einplovmcnt. generatlon ol r. o September 16-30. "What is Wrong w t h the Publtc Sector". New Delhi. No 17.10 Worlung Kerults of Public Sector Enterpr~ses 1he I'uhllc \ e ~ t o r Enterprtses mndc \~gntficant and ebenttul record In term5 ot turnobcr output promotton ot ekports contnbutlon to the exchequer. promotton of balanced regtonal development and decentralisation of industrtes over large areas For thts purpose the Publtc Sector enterprises \pelt out the steps to be taken hv them to accelerate the growth ot anctllaq industnes through huvtng their tnput lequlrernents d\ per thc Clovemment s guidcllne\ 1.overnment of lndla. "Public Enterpnses S u n e l Industrl (. p 22 Bureau of Publtc Enterprises.rnplo\msnt opp~rtunit~es de\elopment of anclllan and small scale sector Hut the financial standlng and profitah~litkot most of these untts are not very much \att\faLton2' An analysls of the worbtne result\ of Central Ciovemment It is true that the cnterpr~sc\durlng 1975-76 and 1995-96 attempted hereunder cftictenc\ of Puhltc Sector Enterpnses cannot he measured tn terms of profitabtlln done Ilo\\s\er other crtterton llhe their capacct\ to contnhute to the puhl~c exchequer pcnerdtiotl of cmplo\ment opportunities earntngs throct~h loreign e\pnrt\ reg~onal halanced development and other soclal constderatlon* should also be p e n wetghtage in n Mohammed Talha. Vol 1 1990-91 p 27 16 ' Minlstrv of . Vol 30. L Ci . "Publtc Undertaktng White Elephants". Bhapat. 1982. September 16-30.6. p IS.

Md . "4baidullah. p 22 ?lannlng Comm~ssion.- - - -- S S Marathc. pp 68 1-683 Through L>is~nvestment". Government 27 of. " ~ e i r . p 88 1966. Indtan Management.73. "Rc-assessing the Public Sector". profit is no doubt of paramount important criteria. But in our country.e alw Sro\rm o\er the \ear\ at the rate of 19 per cent wh~ch1s larger than the rate of in\cstmmt in these enterpnses Besides.1 prt)fit ~I'onc cons~dcrs adinlnistrati\c and other c\pendirurc hlan! studiesm ha\e the ctmcludcd lhat the present lcvel of growth In gross prolits absolutely negligible to earn an! sartstactoq rate of return on capital employed . Oxford tlnlverslty Pre\\. where there is a paucity of funds.08 per cent per annum.32 per cent as can be sccn (iom thc '1 able I 5 . ~t is an important to prolonged further the enterpnses ceases to existz7 In t h ~ s recall that the Planning Commission expected a min~mwnreturn of at least 1 1 to 12 per cent on investment made in Public sectorm. planned profits are a must for the estahlishinent ~ I ' s t ~ i a l i s tpattern of s o c ~ e h ~ ~ ic I>unng 1975-76 and 1995-96. the size of gross prolit after depreciation also enhanced of the rate of 19. The Chartered . If an enterprise fails to make protit. tlong Kong.42 per cent and 1 1 57 per cent respectively 1 hese rates of protitablilt! would leave anything towards ni.the evaluation of their performance.006 crores in 1975-76 to Rs 1.83 per cent In 1993-94 and 7. The s ~ z e of g o s s margin and gross s profit when compared to that of the capital employed are show~ng proportion ranglng a from 1 1 20 p r cent in 1975-76 to 17. I h e gross margin from the operation5 of'these enterpnses ha\. the Investment in the Central Government Fntcrprizes pre\\ h \ more than 17 69 times from Rs 9. Therefore. 1975. "Pnuattsation March 1990. pp 393-398 Accountant. "Fourth Five Year Plan A Draft Outline". I. ultimately it leads to the erosion of its share capital and if t h ~ ssituation is regard.ea&nr Issues in Economic Develovment.874 crores In 1995-96 registering an annual growth of 16. M . March 1995.Gerald.

--.5 Profitability Profile of Public Sector Enterprises During 1975-76 and 1995-96 ~ I I I .39 11 5 7 1390 16. i (Rs In Crores) Percentage of Cmrs Profit to Capital Employed / Cross protit PmTax i Pmlit (after / Percentage of setting o T I Gross Margin E losscs of loss 1 to Capital Employed Gross Margin -r A - i- ' Dcprccim-tion ' Number of ~ n t e r p h Capitnl p l o .h.10 2 37 Source: Bureau o f Publlc E n t e r p r ~ ij'ubllc Lntemnses Suney Mlnlqtn ut Itidurtr) Go\enllnent of Indl* UCHDelh~ Vol 1 1995-96. I i1 . 1 9006 11057 12065 13969 lo182 18207 21915 26526 29851 36382 52965 1972 55617 1014 1490 1489 1766 2055 2401 4012 5184 5771 7386 8270 9897 11082 17478 345 467 574 695 826 983 1758 1720 2205 2758 2983 3382 4142 4866 ' 18312 22223 25227 27600 31846 37 177 1899 7210 8548 9270 9162 92 16 9189 1 8 8 0 1 1126 1348 I234 12 64 12 70 13 19 18 29 19 54 1933 20 30 19 25 19 05 19 93 19 87 19 36 ' 1 1 1 I8 83 125 149 155 159 169 168 188 193 201 207 211 214 220 226 233 276 237 239 240 2173 3095 3357 4405 5293 3501 4003 5076 6544 9768 14065 17 4 9 I 102084 117991 140110 129707 :::: i 1 1 ! I 1975-76 1976-77 1977-78 1978-79 1979-80 1980-81 1981-82 1982-83 1983-84 9 8 5 1986-87 1988-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 668 1028 915 1071 1229 I418 ?654 7465 7565 4628 5287 65 I2 6940 8572 10622 1 1 102 13675 15957 18478 22670 27988 1908 763 607 755 886 1004 1799 1630 1927 2086 2529 3115 3416 7587 4167 5729 7601 9673 1088 1 1 1894 12862 13927 2016 1 : j ' ---CGR -- CCR :Compound ~ r G R a t ~ h 1 1672 [ _ 17 33 1960 21 38 2 30 742 929 758 7 69 7 60 7 79 12 10 13 06 1194 12 72 12 31 12 54 12 48 12 6 8 12 53 10 8 8 I159 11. 1 1 ' 1 .- -- - -- -- --.4 i I - 1 I 1 1 I ! I 8 1 I ' / ' 160 185 225 19 1025 1542 I480 . and DRE i A y. 1 1 ' r- ~+ i Taxea I I ../ .Table 1. Chapter 1 ~~ . . 11 1 i ' 1 1 / 1 .

" ~ a t h uN. the . ''~ija? Kalkar.L7 PROBLEMS BEING FACED BY PUBLIC SECTOR ENTERPRISES IN INDIA The most important criticism levied against the Public Sector h s been a that.11.11.p. *lansung Commission. "Public Sector Measures to Impart Efficiency". . "Eight Five Year Plan". 1991..3-27. Moreover. in relatlon to the capital employed. m. April 79.D. Some of the problems can be enlisted as follows: I. t Vol. pncing policy is determlned by the politicai and social objectives rather than financ~al objectives" Lack of rational pncing policy has resulted in poor profitabll~y and has left leaving little profits for financing the expansion ''~lannin~ Comm~ssion. Lot Udvog. No. General]!. It affected the operational efficlenq of the enterprisesx i ~ . As against h s . I.Januq3. Vol. Even the Government oiIndia has cnticised the performance of the Publlc Sector Enterprises. the Eighth Five Year Plan notes that the Public Sector has been unable to generate adequate resources for sustalrung the growth process-J1. The Economic -. p. pp. the level of profits have been too low.XIU. a . For Instance. the poor performance o i Publ~cSector Enterpnses is due to a host of problems which may be classlfied into financial and non-financial problems based on various studies. A large number of these enterprises have operated at less than 50 pn cent of thelr capaclty for a number of yean. 108. pnces are determlned at a level that would cover total cost (includng taxes) and provide a sufficient net return over &I above thls. Under unlisat~on of installed capaclty is a major reason for the low level of profitablily and poor performance In Public Sector Enterpnses pan~cularlyIn case of capital lntenslve unlts. "Profitability in Public Enterprises".

.unds in the lndlan Publlc Sector Publlc Enternrises Vo19 No 1 1989 P 49 37 Pram11Chaudhiry. 'The Indian Economj New L)elh~. p 157 and Frank C Slngh.ntcr~rtsesVol 4 Nos 1-1 1994 p 6 . t\ \I I he tailure to glbc adequate return on the huge Public k c t o r lntcstrnent has been a lnyor contrlhutlng factor towards the recent fiscal and forelgn exchange crlsls ibhlch has put severe stralns on the lndlan econornj" VII I ach of autonom) polltical cons~derat~ons filling top management posttion\ and In into f and I'r~\atl\atlon I'ldns Publlc E. Nos 3-4. "Publ~cSector Problems The Cost of Delay". J Y ~ ~ l m a d hMohanty 'Public Sector Fnterprises In lnd~a Need for Baslc ap Kelorms Public Cntemnses. 1994 p I 0 . frequent ~ntertercnce the aftalrs of d ) to day administration by respectlke "lhd\cr~ h l Kc\tructur~ngthe Ualan~eSheet\ o Publli Scctor L.III Most Publlc Sector Enterprises are over-capitaltsed and hence productiv~tyof capital I S lowJSdue to poor plann~ngheavy expenditure dunng construction wrong \election of project vtes and allocat~on funds on non-product~veheads IV J xces\lve dependence on external sources of fund\ and Loncequent Interest pdymenl obllgations affected the comrnerc~al vlab~llty of most Publlc Sector cntcrprlses The poor generation of Internal source5 1s attributed to the poor \ Poor planncng nnd dcla) In tmplemcntatlon ol project5 resulted in a r a w In the cost of the prqectn Cost escalat~onwas due to changes In project utes some times due to a bclatcd recognition of product rnlx that IS unsu~tahlc to Indian market conJ~t~on\ Sldrllng the proleclr behlnd t h ~ schedule 1s Ieadtn~to make nlost p r o l ~ ~non \ lahlc'. C M New Delhi. 1980 p 4 . "~crlhat.. No 17.l C halam (I and DAsh~narnunh\ t) Poor Return5 and l o\+ ener era ti on of l.1989.nterprl. Vol 14.

ministries reduced the flexibility in taking up commercially viable decisions and thereby inclrrred large amount of oppo~tunitylosses39 Thus. p 49 29 u l . it is evident that Public Sector Enterprises were incurring losses conttnuously due to the presence of numerous financ~aland non-financial p1:)hlems f3es1des. p 17 K V~swanathanand S Roy Chaudhaq. "l. one essential cause for the losses incurred by these enterprises in the poor operating and linanc~alperformance of these enterprises At the same time. N t i . Vol 14. "Autonomy to Publlc Sector for Rev~tal~satton". this present study is planned to explore ~ n t o thts 1. Nos 1-2. pp9-10 and Summtt Chaharavarthb.cJI<) 0 Inlsr o t > anJ the ~~~rroduction t ' s e I ~cornpetltton in the rc5enr.ossrs In Publrc Sector Enterprises Government should not Interfere Into Day-to-Day Affatrs". 1987. managers and also researchers have not given due weightage and imponarlcc on this prohlem dimen~ion Hence.I'ISATION TRENDS: 4 NO'TE I he new Industrial Pol~c! announced h\ the (ro\ernment of lndia in Jul? 1991 etnphavwd the economic stab~l~sat~on structural reforms whtch alm at creat~ng and d coinpetttl\r and market dri\en economic en\Ironment In lnd~a Further it 5tipulated that the (io\ernmcnt to 'ensure that the Publtc Sector 1s run on bus~nessl ~ n e s ' The ~ nc\r economic pol~c\of 1991 stressed the follo\\mg four measure< to reform the Puhl~c Sector enterprises in lndia I Keduction In the number of ~ndustnes reserved for the Public Sector from 17 to 8 I rc~luc. "Kestructunng the Publtc Sector The Prlvattsatton Opt~on". pcdicy makers. bureaucrats. 39 Uapat. December 29. 1979.8 PRIVA.Public Enter~nser.d ~ ~~ ~t~\c areas. m a . Apnl 16-30. 1994.

and IV. Manganese Ore. (6) M~ncngof Copper. (7) Mlnerals specified In the schedule to the Atomlc Energy (Control of product~on and use order. Molyblenom and \hlolfi-am. Econom~c Surve. ( ( 3 ) Coal and L I ~ I I ~ 1~ . Gold and Diamond. 1992-93.. Sulphur. ( 5 ) 4 Mln~ngof Iron Ore. Chrome Ore.ere deleted from the reser\cd 11st As of no\\. onl? h lndustrles are rcscned for the Puhl~c Sector Thus. Ciypsom.ii. Mineral 011s. 1953.. pp 143-145 .2 ) Atomlc Energy. The d~sinvestmentof shares of a select set of Public Sector Enterprises In order to ralse resources and to encourage equity participation cf general public and workers of in the ownersh~p Public Sector Enterprises. of the 18 ~ndustr~es reserved for the Publ~c Sector slnce 1956. ~ c k s Publ~c Sector tnterprises I'he ne\v ~ndustrlalpol~cy had reduced the 11stof reqerved industries to the Publ~c qector from 18 In 1956 to 8 in 1991 The! are ( 1 ) Arms and Ammun~t~on. there was a draqtic rcduct~on in the b u d g c t a ~ support to sick and potent~all\. 11i The policy towards sick Public Sector Enterpr~sesto he the same as that for the Private Sector. Lead. Z~nc.Tin.- - "<io\ ernment of lnd~a. In add~tion. An improvement of perfbrmance through an MOU system by wh~chmanagement are to he granted greater autonomy but held accountable for specltied results"". and (8) R a ~ lI'ransport In 1993. as many as 12 are now open to the Pr~vate Sector --. Items 5 and 6 \\.

Publ~c Enter~nse. the government has set up a National Renekral Fund (NKF) for retralnlng and redrplo)ment ofretrcnchcd labour 1.82 Policy Regarding Sick Units The lndustr~alPollcy of July 24.Puhl~c Sector Reform In the New lndustnal Policy'.3 Memorundum Of I ndentanding (MOl') The MOlJ system IS presently the centre plece of Publlc Sector reform In l n d ~ aand the new lndustr~al Pollcq of July 1991 which stsls to make 11an effectlbe -41 . 138 cases of puhllc sector unlts (59 belong to Central Government and 79 belong to State\) \\ere rcferrcd tcr RIrR Of th~s. Vol 14. Vol 14. Nos 3 4 . 1994. .8.esh Mohan. ~ h t l e ~ n d ~ n g was recommended to the w up con~crncd l ~ g h I Courts In I4 caw5 ( 5 Central \ and 4 State\ ) The dcclslon to close down the slcb Publlc Sector enterprises has naturall) caused \\idespread resentment rn the \rorhtng class as the danger of retrenchment of labour now looms large 1 o solve thls problem. 1995. pollc) has suggested the the Sector status of Publ~c Sector unlts to be on par 1 ~ 1 tthe Pnvate Sector unlts Publ~c h I-nterpr~ws have al\o heen brought iv~thln l u r ~ s d ~ c t ~ o the Board for Indu5trlal and the of n k~nnnc~al Keconstructlon (BIFK) The UlFK that w ~ l dec~de l whether a s ~ c k Publlc Sector unlt bc cfli.-- - Sun11Khatn~and Kasto Macus". Public Entemnse. Nos 1-2.1. Strateg~c Opt~ons Restwtunng the Publlc for Sector In Ind~a". 1991 marked a s ~ g ~ f i c a n t departure from the concept of a command economy toward\ a market drlven economv in w h ~ h l~beralmarket-based economlc pollc~es cons~deredas the major stlmul~to boost the are growlh and development of the lnd~an n d u s t r ~ e d ~ ~ Hes~des.ct~\cl)restructured or 11 has to be closed do\sn As on December 21.- -- - .1 8 cases \\ere dlqrn~sqedas not ma~ntarnsl)le r e \ ~ \ a l\chcme \\a\ sanctioned for 29 caws.. pp 3-19 U~aL.. pp 240-242 .

the Department of Publlc Enterprises ha! rated the performancc of 39 as excellent and of ?h ah \cr! good Onl? the prrformancc of two were rated pnor ichtle e\. a MOlJ is an instrument whtch defines the relationship of the Publtc Enterprise wtth the government (Adm~nlstrat~ve ~ n t s t and clarifies their M ~) respective roles In order to achieve better performance The emphasis \s on achleving the ncgottatcd and agecd targets rather than ~nterfcrlng the da! to day affalrs In When the Moll s>stem cornmenccd In the year 1987-88 \\hen only four unlts s~pnad perfi~nnancecontracts by the end of the year 1994-95. the gwernment had d~s~nvested a . I'hus.4 Disinl estment I hc major plank of the pnvattsatlon In lndta has k e n the d ~ \ ~ n ~ e s t m e n t of government s eqult. the financial performance of these cnterprtses was better than what \\as targeted for In the hlOl!\ 1.ln O ~ I C C I I \ Cof The dtr~nvestmentma\ be tn moh uy rcsourccq on long-term \rith an unit\ alm to e n h ~ n c e et?ictenc\ and Irnpro\c the prhrmanci.8. of Publ~c\ectnr and to realtgn filth the economtc pol~ctes pursued bv the government Rased on the suggestions of Rangarajan Comm~ttee 1993. In a belect number of profit mah~ngPuhllc tnterpnses prlm.mechanism for performance improvement by prov~dinggreater management autonomy to Publtc Sector Enterprises and at the same time making them accountable by various means. the number of such enterprises had gone upto 99 Of these. Furthermore. the rattonale beh~nd d~s~nvestment In the programme IS to r a w non-tnflattonary form of finance to meet the budgetary needs whtch Include requlre~nents of development actlvltles and scx~al ohl~gattons This probvamme commenced In 1991-92 and by December 31.aluation for 16 i s pendtng. 1995.

C'omrnunlcation. 10. 11 ey are being offered to the public as well The government planning to oWer shares of Public enterprises to the workers of these enterprisesu. A sodium sulphate plant of a departmental enterprise has k e n dec~ded to be glven on l e a x basis. pp 620-672 .U.1mlted has k e n handed o\er to Mi+ Clpanl Automotrres 1 lmlted In Andhra Pradech the AIIwyn Nlssan Llm~ted has hscn handed o\sr to M \ Mnhlndra and Mah~ndraI lrnltcd l. Product1\15.2 Wanagement Transfer Management transfers have taken place In State Owned Publlc Enterprises of Kajasthan.4. But slnce 1992-93.Concepts and Practices In Ind~a".4. 1991 to December 3 1. were mainly the ‘cab cows' w ~ t h'star performance' and public enterprtses tn lndla can take place c~ther through o\\ncrsh~p transfer or manageincnt transfer or financial transfer. 1995 The shares were initially offered to select financial institutions and Mutual Funds. Apnl 1992 and Nand Dhamaja. Vol 36. Frlday 17.1 Ownership Transfer The ownersh~p transfer has alreadv taken place In the case of some PSUs cn lndta I or In\tance In llnar Pradesh IJP Auto Tractor\ 1.8.500 crores through the various rounds of disinvestment during July 1. "PSU Dls~nvestrnent. Januac March 1996. No 4. thc frarncwork oluhlch IS given below 1. Flectron~cs and Iqeav! Chernlcals.part of its equity in 40 Public Sector Enterprises and had raised an amount of Rs. Thirty one PSlls were selected Ihr dlslncestment In the first phase of 1991-92 in the arcas of Petrolcum. Computers and IS also Engineerin uhlch are engaging v~rtual Privatisation of ~nonopnl-\. Fcrtiliscrs. U - - - -- - - - Busmess Standard.

reasons V V lta~nanathan'~. 1990. places the Issue In a \er! a succinct lnrrnnrr IS " in V~CH of the h~storicalbackground of Public Enterprises in\vcd essentially as the best possible means of \\ill achlevlng pre-dctcrm~nedtargcts and ensurlng that 11 does not d~ston parameters of the such end. notzd researcher on Publlc Sector. it ~nconcc~\ablc pr~~atrsation this county u.3 Financial Transfer Financial transfers are gaining the greatest momentum. Routledge. p~ 186-187 .c to he \.ntmll\ sponsored Publ~cUndertallngs In order the :>ri thc 111 Lno~+ the~r stand and prospects In chang~ngeconomic environment In t h ~ s sectlon an attempt made to revlew the existing l~teratureIn evaluating the operating and IS financ~al performances 01 Publ~c Sector Enterprises w t h a vlew to ~dent~fq gaps that exlst the 46 V.8. thc privatisation IS not considered as a panacea for the present excessive day ills of the econom?. neither pcople have an faith in the market forces.o nitlch prlormancc i ~ f C'c.imited is a case In point where~nthe government has become a minor~ty shareholder Ilowevcr.V. The pnvat~sation of Marut1 lldyoy 1.4.1.." I'\~hl~cattctirltw In our countn ha5 hcrn tclcu\cd on . Q u ~ t c s~gn~ficant a scctlon of our society is opposed to prrvatisation for a %men.111 he accepted by the soc~ety an that in as IS end ~tsclt:since thcrc no consensus in favour of market solutions and property r~ghts Th15 non col~s~dzrcd prlrnc factor Tor much ncedcd soc~aland ccunomlc change US ~rnplic that pr~\a~isntion ha\.Ramanathan. London. Prlvatlsat~onIn Develoo~nrrCountrtes.

In) I mah~ng. pp 9-14 Southern Econom~st.. 1974. "~harma B. It 1 s ohsen cd from the qtud! that thc go\. "Publlc Sector Enterpnxs An December 1-15. Evaluat~ono f Performance".S.mof financing dur~ng perlod \\a\ sim~lar the gestatlon ~ r l o d to The contr~bution internal funds was far beh~nd of the potential mainly due to the poor operating profits \\hlch led to thc dcpcndenic on horrcl\\cd funds in the total capital structure t~fthesr. operation and expansion. he has explored Into the impact of pricing policies on the public sector linancing. managerla1 ~nefticiencies lack o i a c c ~ u n t a b ~ l ~ t ~01' ~ ~ ) I i t ~ c i dI ~: I I I ~ ! role . In 1971 wherein hc has examined and analysed d~fferent aspects o f financing o f public enterprises While focussing his attention on the profit and prof~tahilitccriteria. U ~ i n g h K. tnterprlses slnghU has made an exploratory stud) on the performance o f publlc cnterpnses dunng the pcrlod o f ten years endlng 1979-SO lit. has ~dentlfied number a o f reason\ for poor performance o f public cntcrprws gestation perlid. ~harma" has h~ghlightedthe problems o f fiwnc~ngthe operations of publli cntcrprlses at different stage< such ah gestation.Financ~al Plannlnn i n Indian Public V i h Publishing House.R. 1981. 4 IIIJII~. 1971. the long adoptinn of administered pnce p>licles. Finance o f Publ~cEntemses. m. %amanathan. Bombay. Asla Publishing House.ernment was the malor pro\ ~der f finances o f these o cnterpriwh The p. V.i n the field o f research on Public Sector Enterprises.V. .. ctc.ICIICC\. New tklhi. These include. The studies conducted by different researchers and agencies are examined in the following paragraphs An early attempt has been made by Professor ~amanathan" on "Finances o f Public Enterprises".~ttc.

%agchi.~ a ~ c h i "had made an evaluation on the role of Public Sector Enterprises in India against the explicit and implicit objectives during the period of 1976 and 1985. \ He has identified c e m n financial ratios.. The Journal of Institute of Public Enterwises. he suggested a set of d~ffcrent financral measures to eialuate the eflicrcnc) of l'ublrc Sector Enterprises namcl! protir bcfore ti . "Researches on Profitabil~ty of Publ~cEnterprises".Amiya. 1982. April-June 1983. 1983. he has admitted that the measurement of el'ficiency of public enterprises 15 not always possible as against multiple objectives for which they are established. -S S ~ O M ~ "~rakash. S . J. . \slur: of production ro ratios as better rndrcators of performance netrwrth and lnwnlor) turnoier Ilowcver. Om Prakash. Keshav and others. -~hatia B . to salcs. "The Role of Public Enterprises in lndia". pp. After a careful analysis of the rvorks of different authors lrke Sargent Florance. Asian Develo~menl Review. He has apprec~ated the performance of these enterprises in respect of their efficiency in generation of employment and their contribution to the net domestic savings in lndra He lamented on the non-implementation of different recommendations made by the different Committees for the betterment of the efficiency of these enterprises tie has pleaded for restructuring the management styles and accountability aspects of these enterprises ~harra" has made a rc\iebr on d~fferent studres relating profitabrlrt! prfonnance 01' concluded that the to the puhlrc entcrpriqes The stud~es rebrewed by hlrn have deteriorating performance of public common melody for enterprises is the lack of commrtment and lack of accountabilrty of management at all ~rakash" had made an attempt to find out a su~table criteria for measuring the efficiency of Public Sector Enterprises in India. RBI &c~ Pamrs. K.89-100.32-39. profit h-forc ta\ to nct \ror!h. pp. "Measuring the Efficrency of Puhlic Enterprises". Grlber Walker.

He has tried to identify the financial measures of perfomance in Public Sector Enterprises by constructing 91 different types of ratios. - .. pp 83... He has employed the 'factor analysis' to consider different sets of variables Enterprises ~ a o " of Reserve Bank of India has evaluated the performance of nonfinancial non-departmental enterprises in Public Sector coverlng a period o f two decades ending 1980-81 tie observes good capital-output ratios and capital formation rates durlng thls period. 1984. He observes that the role of equity has been decl~nrn!. - .. "Profitab~l~ty Non-F~nancial Non-Depamnental of Enterprises in Publlc Sector 1%142 to 1980-8 I". June 1985 ."~ansal S C "Financ~alMeasures of Performance In Publlc Enterprises". Vol 141. pp 107-130 %machandra Rao.6 per cent and interest beanng funds habe been cxcupylng 30 3 per cent to 33 6 per cent of thc total capital structure dur~ng1975 and 198: Thcsc \hlftz together \ \ I I ~ lncrraslng Intrrcct ratcz hake h~hud up the interest burden of the enterpnses and have adversely affected the financial ---. In publlc enterpnses from 26 4 per cent to 20. ! employing to evaluate the profitability of Public Sector Cobh-Douglas production funct~onsbetween operating surpluses and the fixed assets turnover ratlos tic found that the entire capital formation is financed through brrow~ngs either from government or other institutional agencies He has observed that the h~heIn inflation rate has been reducing the operatlns surpluses to the extent of 0 92 per cent with every one per cent rise in Price Index ~rinivasan" has made a study on some of the recent trends in financing Public Sector Enterprises in Indra. I.Another study in the same pattern is that of the ~ansal".V.125 u~r~nrvasan C. December 1984.ok Udvog. K S. No 4. He has evaluated the productiv~ty In operations b. "Some Recent Trends In the F~nancingof Public Sector Enterpnxs". RBI Staff Occass~onal Pawrs. lndlan Journal of Commerce.

V and D a k s h i ~ Murthy D. He observes that 18 taken-over year period of the study amounting to a loss of Rs 936 crores He suggests for no-more tahe-obers of s~ck lndustnal unlts just for the ~8I. considering the debt capacity and the available operating surpluses in Public Sector Enterprises.flec~s of heavy esternal finances cn net tnconicb and on short-tern1 I ~ q u ~ d ~ t ? p)sltlon. "Performance of Public Enterprises in India. Over Units". This is contrary to the perfomuvlce of pnvate sector enterprises who were able to bring down the share of costlier bank loans during the same period.. ...S. In turn ellirct~ngthe uorhny funds ava~lablr:for successful operation I'he) haw suggested for allo\r ~ n g more pni ate equity part~ciption. 1985 .ltc. ~apad~a"%as made a study to find out the contribut~on of 'takcnover' units In the poor financial surpluses earned by Public Sector Enterprises during 1978-83 He observes that the taken-over units account for 18 per cent of total Investment. Vo1. He suggested for adopting a more realistic approach in the preparation of financing plans and adoption of innovative modes of financing. hala lam G.6. Nu. p. Public Enternrise.alu..! :A. .. .?. Impact of Heavv External F~nancing". No 2.lncreastng the operating efficiency through controlling costs and improving the capacity utilisation and factors such alike .viability. have ~. 22 per cent of total sales turnover and much higher 45 per cent of emplovmcnt of all Central Iiovernment unlts are In red during the entire SIX enterprises. a. 1985.have made a study on the performance of Publlc Sc~torEnterprises In lnd~aand the? have annhuted the poor financ~al performance to the e*cessl\e use of external source\ In the~r (Public Enterpnges) cap~tal structure Tt:.-- "Public Sector's Poor Financial Returns: Place for Taken" " ~ a ~ a d ~M.5.e protecting the employment ot these unlts subsequently behaclng as rel~ef of undemh~ngs most of these arc non-v~ableto ach~cbethe cornrnerc~alresults from and them Chalam and ~ u r t h v .

No 48. Fto\embzr 1986.upraq* has made a stud\ to find out how thc Inbcstments In Central I'uhllc I ntcrprlws arc financed and the rccent twno\\ing\ promcnena t le haz analwed the role of eura b u d g t a n pro\Istonk of Publlc Sector bonds. frlvedlv has made an analys~son the w o A ~ n g of Publtc 5ector Wh~le I ntcrprlsc. Econorn~c and Poliocal Weehlg. to ~onstructa cntcnon for e\iluatlnc the~r financcal performance J ~ u a r d ~ n g concept of profitah~llttas trad~tlonalcntenon on the grounds that t h ~ s the ~rlrerion suflcr< from the prohlsm of accounting I ~ ~ n ~ t a t ~ o n < wggested he ha\ multipl~crIndicator slmple AF per his Indicator the performance 1s a weighted average of I. pp 137148 (iupu I' Anand. . Apnl 1986. "I ~ n a n c ~ a lI'ublic t. Vol XXI.. "Public Enterpnscs In l n d ~ a If not for Profit them for What')".thnur p r o d u ~ t ~ \ ~ t \ the and ratlcr of production to ltz capaclt\ Further he ha< \ugge\ted an e~ght-\tep alwrnar~vc measure for e\aluat~ng the performance of a u n ~ t I'uhllc k c t o r III (.\ ln\estment In Ind~a" t GoWmK &-l'ol~~~cal_WICWI~~. pp 2697-2702 n *l . I k e m h e r 17.ntcrpnrs.~iswanathan" has evaluated the performance of Public Sector Enterprises during 1979-80 and 1984-85 Among the two categor~es industrial unlts. p 5 Y n v c d t . external cornmerclal ~ntercnterpnsc hrroulngs from yxclal~sedcwrdlnatlng commlnees Je\clopmcnt funds and zuch cltherz tle o h w n c s that the (io\ernments' hudsctan V~swanathan. Vol XXII. 1988. he recommends for the adopt~on of Joln Stock concept by erring the enterprtses on ra~ls. of he observes that the production-oriented industries are faring in a bener way than the others In the I'ght of loosing entlre capital-base by some of the loss maklng enterprise. Prajapathl. t ~ n a n c ~ a l I:xwess. h K "Performance Appraisal of Publ~c Enterpnses". N o 5 I .

Bornhay.10. venkatachalamU has made a study on the performance o f Public Sector Ikterprises espec~ally cons~deringthe trends a ~drelative roles of external and lnternal sources. . k~nanclngo f Public Entemses 6 I'ubllshtny House. l . . This has made the enterprises to find sources for themselves on competitive lines. I' "Central Government Fnteqmses An Elghteen Year l'rohlc". proilded the! are run on buslncss llncs by ma\trnlslng thc ~dtc I tcturn on cap~tiil ~ I ctnplovcd IL has put fomarded a number o f susestlons to e tInpr\)\c the \\\brL~ng01 thcx unltb. I l c has ohxrvcd that the Imbalances In the tinanc~al structure caused by heavy d o c~l'dcht capttal ha\ created the Interest burden and 11is constituting In its own ~ for the pcwr findnc~al prrfonanu: tie has suggested for lmproblny the panlclpt~on.-- -- " ~ e n k a ~ h e l a m . March 1989 p 1 1-1') ~ . covenng a pertod o f nineteen years from 1960-61 to 1978-79 He has cvaluatcd the financing pattern o f Public Sector Enterprises and found that these cnterpriscs werc Increasingly dependent upon external sources of finance The horrow~ng\ from government and semi-government agencies continuously increasing. . irwludlng the appllcatlon o f pnnc~ples of sound - - - - -. a _ c ~ ~ ~ f Vol Y ~ No o f \\a operat~ng ct'tic~cnr! through allo\r~ng prl\atc equit! cap~tal\tructurc and ratlonal~sat~on pnctng pol~c! of i'hattopd\a\" has brought an e\aluatlon \\orL on the performance o f ('cntral (towrnment cnterprlws covering a p n o d o f 18 ?can from lWh-87 1%9-70 to l i e has presented the cntlclsm Ic\elled agalnst the performance of Puhllc Sector I ntcrprlws and c\alllittd that the Puh11c Sector un~tsto habe the potentla1 to reco~dIIIUC~~ better has been declining during the recent past. 1988 In India Htmalayan "~hattopadhavav.

wrong selectton of sltes. machinery and staff have costed the natlon to the extent of 10 per cent of total Seventh Plan outlay He suggests for w t l n g off the accumulated losses of some Publlc Sector undertaking and ~ I \ Ca chance to Introduce a neu rcorl-culturc lor the futgre benerment In them Sankar and saiU have conducted a comparatne study on Pnvate and I'uhllc Scctor entcrpr~w \r.nterprc\rc di1'li. k . The Journal of Insl~tuwof Public bntcrw~m. wrong decls~ons. Vol 13. " h v e t e and Publlc %tor . from project approval to ~mplementat~on. D w m k r 1990 *~handrawkara Rao K and Madhavt Istha. A p ~ 16-30. pp 12-16 l U~anLar. ~ t o r ~ ~ ~ eI > t~ c-o ~ r . 1987. Nen I k l h ~ . "Has Public Sector Lived upto Our k\pectatrons".Publlshlng Iioux.r In crrattng a surplus to the extent of 9 per cenl on Sales The Cap~tal emplo\ed In I'ubllc Sector Enterpnses s h o ~ e d bener performance a The profits earned tn I'n\ale Sector IS three ttmes h~gher in sve of the eqult? than In the publtc wctor C'aplul Structuring strateg) and the accurnulat~on rexnes helped the pn\ate of wctor to a h~gh financial efliclenc> Kao and lathaU have made stud! on the Ftnanclal Management and I'r~duct~vlty Publlc Sector Enterpnses covenng a penod of Ten years from 1975-76 to In 1085-Xh ( )peratlonal and Ftnanc~al Performance of these I1 \\a> mlerpnses were evaluated through \orlous operational and financtal rat104 irbscned that h~gh "~hastri Mehm.291-316. . and Sal. S S I' . 7' 1. !:~nanc~al Manawment ln !'ubIic .89". m a .Shastri ~ e h t a " had made a survey on the existing literature on the working of Publlc Sector Enterpnses during the last three and half decades and feels that because of the interference from different quarters.~threspec1 to thelr financ~al etlicienc! dunng penod between 1986-87 and 1988-89 'The study ldent~fiesthat the Pnvate and Publtc Sector I.s v ~ 1991 .A Comparative Study of ' l k i r F~nanc~al Eficlarcy dunng 1986-87 and 1988. poor cmrdtnation. leads to lack of accountabll~ty tie esttmates that the delays. No4.

Econom~cand Polrtrcal Weekly. on the performance of Publlc 1992-93 I ntcrprlw\ through \slue a d d d approach dunns the penod from 1988-89 to wlectlng 1 111. It was also noticed from the study that there exists wider fluctuat~onsin operating wst responsiveness. Feb 18-25.1 as a stud) unit It 3 IS observed from Ihe stud? that the product~r~t) rat~os In term>of ~ a l u added In relauon to vanous resources of BHEL were lncreaslnp dunng e 1988-89 a d 1992-93excepl wrh regard to Capital Employed I h e studv concludes that thcrc c\lrl> greater wope tor tunher Improvement of Value added ratio and slow growth rates in partial and total factor productivities as explanation for poor profitability in most public enterprises during the period. ~f HHFI h * S m l t K Majmdar. utilisation of resources and excessive investment on fixed assets of these enterprises. l'he study Identified lower profitabil~tyin these enterprises dunng the study period and suggests for improvement hq. 1995 Y lndrascm R& thosc.. ( 3 & 4). \\orblnp capltal and human capital agalnst the output of the rcyxctt\c sector5 ''e study results ~ndicate the joint sector firms are effic~ent (h that than gwcrnment wncd firms hut less ~. . VOI 18. "Public.allowing these cntcrprises wort in an entreprcneural atmosphere ~ a j u m d a r ' has eulmlncd a study on relat~ve pertbrmance of Public. P "Performa Appraisal in Public Enterprises Through of Value-Addad Appmach A CW Study". The Journal of lnst~tute Public Enterorises.pp 164-170 - . Jolnt and Private Sectors in h h a n industry - Iivalurrtmng Relatlvc Perfwmamr Differences".made a stud. of In the prl\ate sector than Indrascna ~ c d d t . Jo~nt I'n\ate Seclor\ In lnd~an and lndustn durtng the perlod of 16 \ears hettrzen 197374 and 1988-80 rate\ Ihc pcrfonnancedf thew sectors was measured through growth In 1 otal I ~ \ e dA\wts. 1PW.

shortages. w of financlal and management rarros 01 l~mlted u n k r . etc. as are suggested h\ n Intemat~onallabour Organ~~rtlon (11.All the studies. parliamentary control. excepting purtlng forth Irr 'prl\attwt~onplan< \ear-aner \car tor findnc~ng pan~all\the fiscal deficlts In Annual budget\ 1.. IS extenswe rather than rdcntltilng the broader trcnds In other aspects of tinanc~alprdi)mance 1s alw present In . resemch tluhn~ques work out thc ex-tent of underto u t ~ l ~ w t oof r e s o w at h e cuncnt levels of eRic~cncy and capact9 utlllsat~on n further.10 SEED FOR THE PRESENT STUD\ The studles referred above are prexnbng the performance of Publlc tnlerpnses and the problems betng faced bv these enkrpnses w h u t maklng any ~n depth cnqvln ~ntothe tntcr-rclat~cinsh~p s u ~ ~ a l c d thecr consequent lmpct on a and linanc~al pcrforrnance Morrwbcr m c ~oCthe t u d ~ ha\e made an) s)stemattc anemp n ~ es to employ wphln~cated operattons. The recommendations of d~fferentstudies paved the way for the current trend of panla1 dlstnvestment In select Puhltc Enterpnses ~nInd~a An attempt IS made In the present study to through some llght on the cxlsting yaps In thc opcrat~onal and financlal problems of Publlc Enterpnses In Ind~a \ch-ch arc !eft unattended b) Ciovernmcnt of Ind~a. present the different dimensions of problems associated with the poor financial performance in Public Sector Enterpnses While some of them are stressing on the removal of operational problems on the working of these enterprises like capac~tyutilisatlon. reviewed so far. the others are explaining about the serious implications of borrowings from the Government and the required changes in polictes to be brought In for better management of these enterprises.0) or ~ v r k l n pgroups.

1mitatlons. Hence.iptcr IV h ~ crm1~1nr. Size of the sample unlts.a ~i In of financial pcrfcmnance of the stud) unlts.d h c \ ~ re\ult\ <)Itnc . prov~desthe obja~ivesof the current stud) Methodology adopted Source\ of Data. Value added. the present study was taken up to analyse the overall trends in operating and financial performance of select Public Sector Eiiterprises belonging to I-leavy and Medium Engineering groups. mnds In select financial yardstlchs and the results of pnnc~pal component analcsis 7 k trends in managerial prformance 1 s examined by constructing ditTcrcnt finnrw~al raum ns suggested by International Labour Organisation (11. 1. ~ n ~ l \ \ r . the financ~aland non-linanclal problems being faced b them. sources of finance.these studies.1 1 <'HAP'I'ER PLAN A broad picture about the performance of Public kctor Enterprises. the capital formation. I'oial and Partial Factor productivities are analysed In Chapter Ill ! h.0) 1h e x .o n d u ~ t e d rc\pr.: to e\aluatc the functlonlng of these enterprises and the need for the present stud) are p e n In thl\ Intrvduclon Chapter I C'hapter II. Stat~stical and I. 1. a hrlef re\ie\r of earher ! studre. by appropriately linking up the relevant aspects of p r f o m a c e Bes~des.conometr~c tool\ employed and a bncf profile of the chosen sample units 'I'he operating performance In terms of trends in Capital-output ratios.this study is intended to employ different sophlstlcated statistical and econometric techniques before qualifying any aspect of performance for and wider acccptahil~ty appreciation.

managerial performance and financial performance dimensions. The results are presented in Chapter V.include the general performance. The final Chapter VII presents the broad findings and conclusions of the present s ~ u d \ . Chapter VI provides the econometric results of different multiple regression equations fitted to establish the changes in various determinants in capital formation and financing.

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