Pillars of progress

India has become the 5th largest economy in the world and is fast moving towards becoming the 4th largest. At the time of independence, India's Gross Domestic Product (GDP) was Rs 2.7 lakh crore, which increased to Rs 41.74 lakh crore in the second quarter of the financial year 2023-24, with Miniratna, Navratna, and Maharatna companies, along with public sector banks, playing active, positive, and crucial roles in achieving this remarkable progress.

In 1947, the country's infrastructure was weak, industries such as steel, cement, aviation, shipping, rail, and transportation were underdeveloped, technology was lacking, traditional farming methods prevailed, and attention to allied agricultural activities was minimal. The service sector was also in the nascent stages of development, and crucial sectors like roads, electricity, health, and education lagged behind. Years of colonial rule had severely weakened the economy, necessitating significant improvements in developmental parameters.

Prior to independence, the country had numerous private companies but they were busy in their own development. This resulted in the failure to achieve expected advancements in key sectors. Several areas, including infrastructure and basic facilities like education, health, roads, electricity, water, and housing, remained significantly underdeveloped. Recognising the private sector's limited corrective efforts, the government implemented five-year plans and established public sector undertakings to foster inclusive development within specified timelines.

In this context, Miniratna, Navratna, and Maharatna companies were established to address the country's needs, accelerate economic activities, promote financial inclusion, empower the populace, and contribute to national development. Additionally, the nationalisation of private banks was undertaken to strengthen the economy.

At the time of independence, approximately 1,100 small and large private banks operated in the country, primarily focused on profit-making. To balance profit motives with social concerns, the State Bank of India was nationalised on 1 July 1955, followed by the nationalisation of other banks in 1969 and 1980. By April 2020, the number of government banks decreased from 27 in 2017 to 12 due to consolidation efforts.

Banks, corporates, and infrastructure sectors such as solar energy, wind energy, agro-processing, rail factories, railway lines, airports, ports, and micro, small, and medium industries, along with agriculture and allied sectors like animal husbandry, dairy, handicrafts, and agro-based industries, are working to provide financing for essential rural facilities like schools, roads, electricity, and water. Banks serve as facilitators by connecting villagers to banking services, empowering women, facilitating direct benefit transfers (DBT) or government scheme benefits, and promoting digital transactions to grant villagers access to national and global markets.

As of January 2023, India had 12 Maharatna and 13 Navratna companies, along with 62 Miniratna companies, all financially robust and profitable entities listed in the stock market. Their earnings per share, net capital, net profit, etc., often surpass those of many private companies, while their borrowing levels remain relatively low.

Public sector units are categorised as Central Public Sector Enterprises (CPSEs), Public Sector Banks (PSBs), and State Level Public Enterprises. CPSEs are regulated by the Ministry of Heavy Industries and Public Enterprises, with the Department of Public Enterprises (DPE) serving as the nodal department for all Central Public Sector Enterprises (CPSEs). DPE formulates policies to enhance CPSE’s performance, focusing on continuous evaluation, financial autonomy, personnel management, and other relevant aspects.

In the financial year 1996-97, Navratna status was granted to public sector companies already classified as Miniratna companies, whose performance consistently improved, and the government believed that granting them special rights and financial autonomy could further enhance their performance, potentially leading them to become Maharatna Companies. Notable Navratna companies in India include Bharat Electronics Limited, Container Corporation of India Limited, Engineers India Limited, Hindustan Aeronautics Limited, and others.

Due to the implementation of appropriate policies by the government, further improvement in the performance of Navratna companies was soon recorded. Meanwhile, the government came up with the Maharatna scheme on February 4, 2010, and Navratna companies meeting the parameters like profits, availability of adequate capital, low debt, liquidity, financial autonomy, etc., were given the status of Maharatna company.

At present, Bharat Heavy Electricals Limited (BHEL), Bharat Petroleum Corporation Limited (BPCL), Coal India Limited (CIL), Gas Authority of India Limited (GAIL), Hindustan Petroleum Corporation Limited (HPCL), Indian Oil Corporation Limited (IOCL), National Thermal Power Corporation (NTPC), Oil and Natural Gas Corporation (ONGC), Power Grid Corporation of India, Steel Authority of India Limited (SAIL), Power Finance Corporation, and Rural Electrification Corporation Limited (REC) are the 12 Maharatna companies.

Maharatna companies have freedom in choosing their investment option. They can invest up to 15 per cent of their total assets in a project. The investment limit of these companies is Rs 5,000 crore because their operating costs are high. Having a broad scope of business and financial autonomy helps these companies to grow globally and compete with global players.

Heavy industry, energy, like gas, crude oil, coal, renewable energy, steel, cement, mining, etc., play an important role in ensuring the development of any country, but these sectors cannot develop automatically. To strengthen these sectors, investment, technical assistance, and skilled workers are required. Generally, the private sector does not come forward to strengthen the infrastructure because investment in this sector is made for a long time, due to which the capital also remains stuck for a long period. Therefore, the government formed public sector undertakings to strengthen the infrastructure of the country.

Today Miniratna, Navratna, Maharatna companies, and public sector banks are working to provide employment directly and indirectly. Also, due to these, economic activities are accelerating in the country, the private sector is being helped to grow, infrastructure is getting strengthened, common people are getting access to basic facilities, development is gaining momentum, etc.

Views expressed are personal