Public Sector Undertakings

Story hook

On 3 February 1959, four Soviet engineers and 500 Indian construction workers laid the foundation stone of what would become Bhilai Steel Plant in Madhya Pradesh's Durg district. Within seven years, the plant would produce more steel than all of pre-1947 India. By 1972, it would receive India's first export order for heavy steel rails — to Iran. By 2024, SAIL (Steel Authority of India Ltd), Bhilai's parent company, would post ₹1,03,477 crore in revenue and be one of nine Indian firms in the elite "Maharatna" category — public-sector undertakings that the government has deemed mature enough to make ₹5,000-crore investments without prior approval.

The Bhilai story is the microcosm of India's CPSE journey. In 1951, India had 5 Central Public Sector Enterprises (CPSEs) with a total investment of ₹29 crore. By March 2024, India had 389 operating CPSEs with cumulative paid-up capital of ₹4.66 lakh crore and total revenue of ₹35.43 lakh crore. The largest seven — NTPC, Indian Oil, ONGC, SBI, LIC, Coal India, Power Grid — account for nearly half of all CPSE turnover. The government's stake in these flagships is between 51% and 90%, and the annual dividend they pay to the exchequer crossed ₹74,000 crore in FY24 — a vital revenue stream.

But the story has shadows too. BSNL has been loss-making for over a decade. Air India was sold to the Tatas in January 2022 after accumulating ₹61,000 crore in losses. Hindustan Photo Films, HMT Watches, Hindustan Cables — all once household names — have been shut down. CPSEs are no longer the unquestioned pillars of India's economy. The question UPSC asks today is: what role should they play in a market-led India?

Why this matters for UPSC

PSU classification (Maharatna, Navratna, Miniratna I/II) is a near- certain Prelims topic — at least one MCQ every 2 years on which companies have which status, what the financial criteria are, what autonomy they get. Mains questions probe PSU performance, privatisation, strategic sectors, disinvestment policy. Interview boards regularly use specific PSUs (LIC, ONGC, Coal India) as case studies for "should the government be in this business?"

The topic threads through planning (IPR 1956 created the Schedule A list of public-sector reserved industries), fiscal policy (disinvestment receipts, dividend), labour issues (CPSE employment, voluntary retirement schemes), and federalism (states own State PSUs alongside Central PSEs).