A critical challenge faced by Public Sector Enterprises (PSEs) in India during the 1947-1990 period, beyond just financial losses, was often related to:
Show answer & explanation
Correct answer: C
Explanation
Solution: The correct answer is Bureaucratic rigidities and political interference in their operations.
Explanation:
☛ Between 1947 and 1990, India pursued a planned economic model where Public Sector Enterprises (PSEs) occupied the commanding heights of the economy.
☛ Beyond financial losses, a major operational challenge was the lack of managerial autonomy due to excessive administrative control, red tape, and frequent political interference.
☛ Day-to-day decisions regarding pricing, recruitment, procurement, and investments were heavily controlled by ministries rather than enterprise boards.
☛ This intense bureaucratic oversight led to chronic delays, misallocation of resources, and compromised accountability in achieving commercial viability.
Extra Exam-Relevant Facts:
☛ Industrial Policy Resolution (IPR) 1956: Classified industries into three categories, placing strategic and heavy industries under exclusive state control (Schedule A).
☛ Mahalanobis Model: The Second Five-Year Plan (1956–1961) laid the foundation of state-led industrialization focused on basic and capital goods industries.
☛ Economic Reforms of 1991: Reduced the number of industries reserved for the public sector and introduced policies of disinvestment and deregulation.
☛ Autonomy Schemes: To reduce bureaucratic interference, the government introduced the Navratna and Miniratna status in 1997, granting enhanced financial and operational powers to performing PSEs.
Important One-Liners for Upcoming Exams:
☛ Which Industrial Policy Resolution is often referred to as the 'Economic Constitution of India'? → Industrial Policy Resolution, 1956
☛ During which Five-Year Plan was the heavy industry-focused Mahalanobis model implemented? → Second Five-Year Plan (1956–1961)
☛ In which year was the 'Navratna' scheme introduced to grant greater autonomy to Central Public Sector Enterprises? → 1997
☛ Who was appointed as the chairman of India's first Disinvestment Commission established in 1996? → G. V. Ramakrishna
☛ How many industries are currently reserved exclusively for the public sector in India? → 2 (Atomic Energy and Railway Operations)