Research Seminar on Public Sector Performance in India and the Ongoing Contestation between Efficiency and Equity

ISID organized a webinar on “Public Sector Performance in India and the Ongoing Contestation between Efficiency and Equity” on November 30, 2023. Dr Satyaki Roy, Associate Professor, ISID, and Dr Santosh Kumar Das, Assistant Professor, ISID, made the presentation. The presentation was discussed by distinguished panelists namely Prof R Nagaraj, formerly with Indira Gandhi Institute of Development Research, Mumbai; Prof Surajit Majumdar, Professor, Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi; and Prof V Shanthakumar, Professor, Azim Premji University, Bengaluru. Mr Ajay Shankar, Former Industry Secretary, Government of India, and Member, ISID Governing Board, moderated the session.


Abstract: This paper aims to revisit the performance of public sector in India particularly in the context of market-oriented reforms pursued in the past few decades. It is found that the share of public sector in GDP, if we compare pre and post reform periods, on an average didn’t show a drastic decline. In fact, the number of central public sector enterprises (CPSEs) and particularly the number of profit making CPSEs increased sharply in post 2000s. The performance of public sector by usual indicators improved initially because of change in institutional arrangements in terms of enhanced transparency, greater autonomy and so on, being manifested in the rise in both net profit and profitability during the same period. However, performance on the same count suffers a decline since 2012, as the paper argues, primarily because of decline in public investment in plant and machinery as well as in technology and due to relative under-pricing of public sector output. The paper also underlines the fact that the contestation between efficiency and equity is very much embedded in the idea of public sector. These enterprises are supposed to fulfil certain goals both in the input and output side which cannot be adequately captured by the one-dimensional metrics of efficiency used otherwise to measure performances of profit maximizing firms.