Describe the Industrial Policy 1991, towards the public sector.
The Government of India introduced the Industrial Policy in 1991, marking a radical shift in the approach towards the public sector. Unlike earlier policies, the 1991 policy redefined the role of the public sector to make it more competitive and efficient.
The government introduced four major reforms regarding the public sector. The main elements included the decision to restructure and revive potentially viable PSUs and to close down PSUs which could not be revived. Additionally, the policy aimed to bring down the government's equity in all non-strategic PSUs to 26 per cent or lower, while ensuring the interest of workers was fully protected.
A significant change was the reduction in the number of industries reserved for the public sector from 17 to 8 (and later to 3). This allowed the private sector to enter areas previously reserved for the government, meaning public sector units now had to compete with private enterprises.
The policy initiated disinvestment, involving the sale of equity shares to the private sector and the public. The objective was to raise resources and encourage wider public participation. This signaled the government's decision to withdraw from the industrial sector and reduce its equity in undertakings.
Finally, the public sector was held accountable for losses and return on investment. Continuously loss-making units were referred to the Board for Industrial and Financial Reconstruction (BIFR) for overhauling or shut down to improve managerial efficiency.
Explanation
The answer is derived directly from the textbook sections detailing the 'Government policy towards the public sector since 1991'. It covers the four specific policy elements (restructure, close down, reduce equity, protect workers), the reduction of reserved industries, the concept of disinvestment, and the shift towards accountability and competition as described in the context.
Solution Steps
Step 1: Introduce the radical shift in policy in 1991 regarding the public sector.
Step 2: List the four main elements of the policy: restructuring viable PSUs, closing unviable ones, reducing equity to 26%, and protecting worker interests.
Step 3: Explain the reduction of reserved industries from 17 to 3, forcing the public sector to compete with the private sector.
Step 4: Define disinvestment and its objectives (raising resources, wider participation).
Step 5: Conclude with the redefined role involving accountability for losses and referral to BIFR for inefficient units.