Introduction
Public Sector Enterprises (PSEs) are organizations that the government fully or partially owns and controls to promote economic growth, equity, and social welfare. These enterprises operate in diverse sectors, providing essential services, supporting infrastructure, and generating employment.
Brief History
After independence, India’s government established PSEs as part of its vision for self-reliance and rapid industrialization. The First Five-Year Plan of 1951 marked the beginning of PSEs, with a major emphasis laid down by the Industrial Policy Resolution of 1956 to expand PSEs in core sectors.
Classification of PSEs
To improve efficiency and autonomy in operations, the Government of India categorized PSEs based on financial performance, market reach, and strategic importance. These categories include Maharatna, Navratna, and Miniratna, each with specific eligibility criteria and autonomy levels.
1. Maharatna
- The Maharatna Scheme was launched in May 2010 to enable large Central Public Sector Enterprises (CPSEs) to become global players by expanding their domestic and international operations.
- Eligibility Criteria:
- Must hold Navratna status.
- Listed on an Indian stock exchange.
- An average annual turnover of over ₹25,000 crore for the last three years.
- An average annual net worth of more than ₹15,000 crore for the last three years.
- An average annual net profit after tax of over ₹5,000 crore for the last three years.
- Significant global presence or international operations.
- Investment Autonomy: These companies can invest up to ₹5,000 crore or 15% of their net worth in a project, without seeking government approval.
- Ex: Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation Limited (IOCL). Currrently 14th Maharatna - (HAL) Hindustan Aeronautics Limited
2. Navratna
- Established in 1997, the Navratna status provides mid-sized CPSEs with enhanced financial and operational powers, enabling them to compete more effectively and gain a global edge.
- Eligibility Criteria:
- Must be a Miniratna with 4 independent directors on its board.
- Achieve a composite score of 60 or more out of 100 across six parameters, including net profit to net worth, manpower cost, profit before depreciation, interest, tax, and others.
- Must not have defaulted on loan or interest payments due to the government.
- Should not depend/rely on budgetary support or government guarantees.
- Investment Autonomy: Navratna companies can make investments up to ₹1,000 crore or 15% of their net worth on a single project without government approval.
- Ex: Bharat Electronics Limited (BEL).
3. Miniratna
- The Miniratna status was introduced in October 1997 to provide increased autonomy and financial powers to profitable CPSEs that were not eligible for Navratna status. Miniratna companies are further categorized into two subcategories based on profitability and financial strength.
Miniratna Category-I
- Eligibility: CPSEs that have recorded profits continuously for the last three years, with pre-tax profits of at least ₹30 crore in one of those years and a positive net worth, qualify for Category-I.
- Investment Autonomy: These companies can make investments up to ₹500 crore or an amount equivalent to their net worth, whichever is lower, without government approval.
Miniratna Category-II
Eligibility: CPSEs with continuous profits for the last three years and a positive net worth are eligible for Category-II.
Investment Autonomy: Miniratna-II companies can invest up to ₹300 crore or 50% of their net worth, whichever is lower, without government approval.
Example: Cochin Shipyard Limited (Category-I), Airport Authority of India (Category-II).
Conclusion
Public Sector Enterprises play a pivotal role in India’s economic landscape, supporting infrastructure development, job creation, and social welfare. The structured classification of PSEs enables each category to operate with an appropriate level of autonomy and meet the country’s broader economic objectives.
