1. In which five-year plan emphasis is given to developing the public sector?
Read the following passage and answer the questions given below:
In the Second Five Year Plan (1956), the public sector played a major role by setting up basic and heavy industries for the economic and industrial development of India. In India, most of the Public Sector Units (PSUs) were working inefficiently. So, many PSUs were running in loss. PSUs never have competitive nature. PSUs know that whenever they will go into loss, they will be bailed out by the government. This attitude kills that competitiveness and cost-effective working nature of the unit which is necessary to earn profit.
In 1991, the Government decided to transfer ownership to the private sector which is more efficient in management, allocation of resources, better services to its customers, etc. Also, it helps to develop the local capital market and source of revenue to the government. Videsh Sanchar Nigam Limited (VSNL) was established in 1986 by the Government of India to bring internet to our country. In 2002, the Government of India decided to disinvest its shareholdings. TATA group acquired a 45% stake in VSNL. On 13th February 2008, VSNL was completely acquired by TATA Group and renamed TATA Communications.
At present, TATA Communications connects its customers in global offices at speed of up to 10 Gbits. It delivers voice, video, and data connectivity through subsea cable networks in 200 countries and territories. In 2018, annual income is 5575.96 crores and net profit (after deducting taxes) is 266.63 crores.
1. In which five-year plan emphasis is given to developing the public sector?
2. Identify the reasons for the poor performance of PSUs.
3. Find out the economic concepts from this case study.
4. Explain the benefits of privatisation.
5. Explain the growth of VSNL after privatisation.
1 Answers
1. In the second five-year plan, emphasis was given to develop the public sector.
2. PSUs were working inefficiently, lack of competitive nature, dependence on bailed out by the government, lack in cost-effective working nature, etc. led to poor performance of PSUs.
3. Privatisation and Disinvestment.
4. Under privatisation, ownership is transferred from the public sector to the private sector because the private sector is more efficient in resource allocation, management and provides better services to the customers. Privatization can be an important source of revenue to the government and help to develop local capital markets.
5. In 2008, privatisation of VSNL took place. VSNL was completely acquired by the TATA group and renamed TATA Communication. At present TATA Communication is providing internet services globally. Its cable network is in 200 countries and territories. The annual income is 5575.96 crores and the net profit is 266.63 crores in 2018.