RISE OF INDIAN PSUs IN THE GLOBAL ARENA

After a decade of underwhelming performance, public sector undertakings have made a comeback in 2022, which was largely due to a robust recovery in banks. 2022 proved to be a boon for PSUs with PSU banks reporting an accelerated improvement in their bad loan ratios, while credit growth touched 20% in Q2 FY23, up from 3% in Q1 FY22.

- Surbhi Arora

The term Public Sector Undertaking (PSU) refers to a Government Company. "Government Company" is defined under Section 2 (45) of the Companies Act, 2013 as any company in which not less than fifty-one percent of the paid-up share capital is held by the Central Government, or by any State Government or Government, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company.

Public Sector Undertakings (PSUS) refer to commercial ventures of the Government where user fees are charged for services rendered. The tariff/fees may be market-based or subsidised. They are usually fully owned and managed by the Government such as Railways, Posts, Defence Undertakings, etc.

There are benefits of a PSU. It helps in employment generation and many PSUs have created millions of jobs to tackle the unemployment problem in the country. Initially, after independence, to bring about a balanced regional development in the country, PSUs had located their plants in backward parts of the county. These areas lacked basic industrial and civic facilities like electricity, water supply, township, and manpower.

Apart from the generation of internal resources and payment of dividends, PSUs have been making a substantial contribution to the Government exchequer through payment of taxes, excise duty, customs duty, etc.