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-in-India.webp "Public Sector Undertakings Psus India")
Public Sector Undertakings (PSUs) in India are government-owned or controlled corporations established to undertake commercial activities and contribute to the socio-economic development of the country.
PSUs are companies where the government holds more than 50% stake, either fully owned or as the principal shareholder. These can be listed or unlisted, formed to serve economic and strategic goals. PSUs include CPSEs (Central Public Sector Enterprises) and SLPEs (State Level Public Enterprises).
Public Sector Undertakings (PSUs) are government-owned companies that play a vital role in India’s economy. They drive industrialisation, build infrastructure, and provide essential services like power, transport, and telecom. PSUs contribute to employment generation, regional development, and government revenue through taxes and profits. They also support social welfare by supplying essential goods at affordable rates. Classified as Maharatna, Navratna, and Miniratna based on their autonomy, PSUs remain crucial for both economic growth and public welfare.
Based on their financial performance, size, and strategic importance, central PSUs are classified into different categories:
These are the largest and most profitable PSUs with extensive operations across multiple sectors.
Eligibility Criteria Include:
Average annual turnover of over ₹25,000 Crores in the last 3 years
Net worth over ₹15,000 Crores
Listed on stock exchange with significant global presence
Examples:
ONGC
Indian Oil Corporation
NTPC
Bharat Petroleum Corporation Limited (BPCL)
These are PSUs with financial autonomy and solid performance records.
Criteria include:
At least 3 ‘excellent’ or ‘very good’ ratings under the Memorandum of Understanding (MoU) system
Composite score of 60+ on six parameters including profitability, asset turnover, and earnings per share
Examples:
Hindustan Aeronautics Limited (HAL)
Bharat Electronics Limited (BEL)
Shipping Corporation of India (SCI)
These are smaller PSUs with consistent profits and operational efficiency.
Category I: Profit for the last 3 years and net worth of ₹30 Crores
Category II: Profit for the last 3 years but lower net worth
Examples:
Airports Authority of India (AAI)
Bharat Sanchar Nigam Limited (BSNL)
MECON Ltd.
Public Sector Undertakings (PSUs) in India are classified by ownership into three types:
Central Public Sector Enterprises (CPSEs): Majority stake (51% or more) held by the central government.
State-Level Public Enterprises (SLPEs): Majority stake held by a state government.
Public Sector Banks (PSBs): Banks where the central government or other PSBs hold at least 51% ownership.
This classification reflects the level of government control and area of operation.
PSUs are found in several vital sectors of the Indian economy:
Sector |
Major PSUs |
|---|---|
Oil & Gas |
ONGC, HPCL, Indian Oil Corporation |
Power & Energy |
NTPC, Power Grid, NHPC |
Steel & Mining |
SAIL, NMDC, Coal India |
Defence & Aerospace |
HAL, Bharat Dynamics, BEL |
Transport & Shipping |
Shipping Corporation, CONCOR, Air India Assets |
Telecommunications |
BSNL, MTNL |
Financial Services |
SBI, LIC (until IPO), Bank of Baroda |
These undertakings are crucial for national security, public service, and long-term infrastructure development.
PSUs play a pivotal role in India’s economic strategy, with broad contributions including:
Employment Generation: Major recruiters for skilled and unskilled labour
Revenue Contribution: Pay substantial dividends and taxes to the government
Infrastructure Creation: Build transport, energy, communication networks
Strategic Security: Handle defence, atomic energy, and oil sectors
Stabilising Prices: Help manage inflation by maintaining supply in essential sectors
Despite challenges from privatisation, PSUs remain essential in balancing public welfare with economic growth.
Since the 1990s, the Indian government has pursued disinvestment — selling its stake in PSUs to reduce fiscal burden and promote efficiency.
Types of disinvestment include:
Minority Stake Sale: Government retains control
Strategic Sale: Majority stake sold to private sector
Listing PSUs: Public offering of shares on stock exchanges
Notable recent examples include:
LIC IPO (2022)
Air India sale to Tata Group (2021)
Proposed divestment of BPCL and IDBI Bank
The objective is to streamline operations, attract private investment, and reduce fiscal deficits.
Many listed PSUs offer stable returns and are known for their dividend payouts. PSU stocks are widely followed by conservative investors for their predictable performance, though they may face policy and governance-related risks.
Some listed PSU indices include:
Nifty PSE Index
Nifty CPSE Index
These track the performance of listed PSUs on the NSE and serve as benchmarks for themed mutual funds or ETFs.
The biggest Public Sector Undertaking in India is Indian Railways. It is the largest employer in the country and plays a crucial role in passenger transport, freight movement, and national connectivity.
PSUs have played a key role in infrastructure, energy security, and affordable services, especially in rural electrification and railway modernisation. However, rising competition, bureaucracy, and inefficiencies have sparked debates on whether they should be restructured, corporatised, or phased out in non-core sectors.
PSUs in India are key to economic development, contributing to sectors like energy, defence, and banking. As India moves towards privatisation and market liberalisation, PSUs are evolving from state-controlled entities to competitive players.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
A PSU (Public Sector Undertaking) is a company in which the government holds more than 50% equity stake.
PSUs are classified as Maharatna, Navratna, or Miniratna based on their financial and operational performance.
Yes, many PSUs are listed on the NSE and BSE, allowing public investment in them.
CPSE refers to Central Public Sector Enterprises, while PSU is a broader term that includes both central and state government undertakings.
Privatisation is aimed at improving efficiency, reducing government spending, and bringing in private sector innovation and investment.
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