At the time of Independence, it was expected that public sector enterprises would play an important role in achieving certain objectives of the economy. They were to do this either by direct participation in business or by acting as a catalyst for economic development.

One of the primary roles of the public sector was the development of infrastructure. The process of industrialisation could not be sustained without adequate transportation and communication facilities, fuel and energy, and basic and heavy industries. The public sector took responsibility for building this essential infrastructure.

The private sector was unwilling to invest in projects which required heavy investment and had long gestation periods. Therefore, the government took it upon itself to develop infrastructural facilities and provide for goods and services essential for the economy. The public sector would build up infrastructure for other sectors and invest in key areas.

It was only the government which could mobilise huge capital, coordinate industrial construction, and train technicians and workforce. This capability was essential for sustaining industrialisation in the country.

The Five Year Plans in the initial stages of development gave a lot of importance to the public sector. This role was significantly different from what was envisaged in the post-1991 period after liberalisation, privatisation, and globalisation.