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For an extended period of time now no major private investment has been made in India despite various sops offered by the government. The state of private investment in India is so abysmal that some time ago Union Finance Minister Nirmala Sitharaman castigated private investors for showing apathy towards investing in the country. Even after such brutal criticism, private investors are still shy of making substantial investments despite India being one of the fastest growing economies of the world presently. Rather, they are more interested in investing abroad for bigger gains in sectors like Information & Technology (IT). As a result, flight of capital from India to foreign nations is continuing unabated, hindering the economic growth of the country.
Angry with the present trend of investing abroad adopted by private investors, many have urged the government to immediately withdraw all financial and other related benefits offered to Indian INCs. But such a step is not advisable as it will harm the efforts towards creating an investor-friendly environment in the country. So the best possible way to avert this present investment crisis is to rejuvenate the public sector undertakings (PSUs), instead of waiting for private investments to come. The rejuvenation will definitely increase the share of the industrial sector of GDP, which presently stands at only 20 per cent.
None will question the claim that PSUs have played an important role towards strengthening the country’s economy. There were only five PSUs in 1951. Since then, the number of PSUs in the country have risen to 365, which is no mean achievement. As of March 31, 2019, total investment in this sector stood at 16.41 lakh crores and the amount of paid-up capital was 2.76 lakh crores. In the same year, all PSUs combined had paid nearly 278,075 crores as tax. Apart from contributing heavily to the nation’s wealth, PSUs have provided employment to 12.34 lakh people. The numbers of employees will be more if contractual workers are taken into consideration.
It’s true that not all PSUs are profit-making, profitable PSUs mainly belong to oil, coal and power sectors. There are a total of 41 PSUs in these sectors and together they ensure two-thirds of PSU profits. But it doesn’t mean that other PSUs should be ignored, rather we must take the challenge to make these loss-making PSUs productive and profitable. Simply offloading the PSUs holdings may bridge the revenue gap, but will never prove beneficial in the long run. So, every attempt to revive PSUs should be made by the government instead of selling sick undertakings to the private investors who are driven by profit only, deliberately overlooking public interest. As the next budget will be tabled soon, the proposal to create a dedicated fund for strengthening the PSUs should be made, in line with the fund already established for creating infrastructural facilities.