Central Public Sector Enterprises (CPSEs)

Central Public Sector Enterprises (CPSEs) are government-owned companies in India in which the Central Government holds a majority stake (51% or more). These enterprises operate in various sectors of the Indian economy, including manufacturing, mining, power generation, telecommunications, and financial services. CPSEs play a significant role in the country’s economic development and are instrumental in achieving the government’s social and strategic objectives.

History and Evolution

The concept of CPSEs in India dates back to the pre-independence era, with the establishment of the Indian Railways in 1853. After independence, the government focused on creating a strong public sector to drive economic growth and self-reliance. The Industrial Policy Resolution of 1956 emphasized the importance of the public sector in achieving the country’s industrial and economic goals.

Over the years, CPSEs have evolved and undergone various reforms. The economic liberalization of 1991 introduced competition and private participation in sectors previously dominated by CPSEs. The government has also taken steps to improve the efficiency and profitability of CPSEs through disinvestment, restructuring, and corporate governance reforms.

Categories and Sectors

CPSEs are categorized based on their net worth and turnover. The three categories are:

• Maharatna: CPSEs with an average annual turnover of more than Rs. 25,000 crore, an average annual net worth of more than Rs. 15,000 crore, and an average annual net profit of more than Rs. 5,000 crore during the last three years.
• Navratna: CPSEs with an average annual turnover of more than Rs. 1,000 crore, an average annual net worth of more than Rs. 2,000 crore, and an average annual net profit of more than Rs. 200 crore during the last three years.
• Miniratna: CPSEs with an average annual turnover of more than Rs. 500 crore and an average annual net profit of more than Rs. 30 crore during the last three years.

CPSEs operate in various sectors, including:

• Energy (e.g., Indian Oil Corporation, NTPC, Coal India)
• Manufacturing (e.g., Bharat Heavy Electricals Limited, Steel Authority of India Limited)
• Mining (e.g., National Mineral Development Corporation)
• Telecommunications (e.g., Bharat Sanchar Nigam Limited, Mahanagar Telephone Nigam Limited)
• Financial Services (e.g., State Bank of India, Life Insurance Corporation of India)

Performance and Contribution

CPSEs have made significant contributions to the Indian economy. In the financial year 2020-21, there were 256 operating CPSEs, with a total turnover of Rs. 24.61 lakh crore and a net profit of Rs. 93,294 crore. CPSEs also provide substantial employment opportunities, with a total workforce of around 14.04 lakh employees as of March 2021.

CPSEs have been instrumental in developing critical infrastructure, such as power plants, steel mills, and telecommunication networks. They have also played a crucial role in achieving the government’s social objectives, such as providing affordable housing, healthcare, and education.

Challenges and Reforms

Despite their contributions, CPSEs face several challenges, including:

• Competition from private players
• Operational inefficiencies and low productivity
• Excessive government control and bureaucracy
• Lack of autonomy in decision-making
• Legacy issues, such as overstaffing and outdated technology

To address these challenges, the government has initiated various reforms, such as:

• Disinvestment and strategic sale of CPSEs to improve efficiency and reduce fiscal burden
• Granting greater autonomy to CPSEs through the Maharatna, Navratna, and Miniratna schemes
• Encouraging CPSEs to invest in research and development and adopt new technologies
• Improving corporate governance and transparency through the implementation of guidelines and best practices

Central Public Sector Enterprises have contributed to industrial growth, infrastructure development, and social welfare. While facing challenges in the evolving business landscape, CPSEs continue to adapt and reform to remain competitive and relevant. The government’s ongoing efforts to improve the efficiency and profitability of CPSEs will be crucial in ensuring their sustainable growth and contribution to the Indian economy.