Topic 04 of 6 · Chapter 04 · Indian Economy
Public Sector Undertakings (PSUs) & Disinvestment
Role of PSUs, Navratna/Maharatna/Miniratna status, disinvestment policy, and privatisation of Air India.
📋 In This Article
1. What are PSUs?
Public Sector Undertakings (PSUs) are companies where the government (Central or State) holds at least 51% equity. They were established to:
- Develop strategic industries (defence, steel, oil)
- Provide essential services at affordable prices
- Generate employment
- Mobilise resources for development
- Prevent monopoly by private sector
⭐ Examples of Major PSUs: ONGC, BHEL, SAIL, NTPC, Coal India, Indian Oil, GAIL, BPCL, HAL, BEL, BEML, MTNL, BSNL, Air India (now privatised), LIC, SBI, PNB.
2. Navratna, Maharatna, Miniratna
The government classifies PSUs into categories based on their financial performance and autonomy:
| Category | Criteria | Autonomy | Examples |
|---|---|---|---|
| Maharatna | Net profit ≥ ₹5,000 crore for 3 years; Net worth ≥ ₹15,000 crore; Turnover ≥ ₹25,000 crore | Can invest up to ₹5,000 crore without government approval | ONGC, BHEL, SAIL, NTPC, Coal India, Indian Oil, GAIL, BPCL, HAL, Power Grid |
| Navratna | Must be Miniratna Category I; Score ≥ 60 points on 6 parameters | Can invest up to ₹1,000 crore without government approval | BEL, BEML, MTNL, NBCC, NLC, NMDC, RITES, WAPCOS |
| Miniratna Category I | Profit for 3 consecutive years; Pre-tax profit ≥ ₹30 crore in one year | Can invest up to ₹500 crore | AAI, BSNL, CONCOR, IRCTC, IRFC |
| Miniratna Category II | Profit for 3 consecutive years | Can invest up to ₹300 crore | Various smaller PSUs |
3. Disinvestment Policy
Disinvestment means the government selling its stake in PSUs to raise funds and improve efficiency.
- Minority disinvestment: Government retains majority stake (>51%)
- Majority disinvestment: Government sells majority stake but retains some
- Strategic sale: Government sells majority stake + transfers management control to private buyer
- Complete privatisation: Government sells entire stake
✅ Why Disinvestment? (1) Raise revenue for government, (2) Reduce fiscal deficit, (3) Improve efficiency of PSUs, (4) Reduce government’s role in commercial activities, (5) Encourage private investment.
4. Air India Privatisation
Air India was privatised in January 2022 — sold to Tata Sons for ₹18,000 crore. This was a landmark privatisation after decades of losses.
- Air India was founded by J.R.D. Tata in 1932 as Tata Airlines
- Nationalised in 1953 by Nehru government
- Accumulated losses of over ₹70,000 crore by 2021
- Tata Sons won the bid in October 2021
- Transfer completed in January 2022
5. Key Points for Exam
🔑 Must-Remember Facts
- PSU = government holds at least 51% equity
- Maharatna: Can invest up to ₹5,000 crore without approval
- Navratna: Can invest up to ₹1,000 crore without approval
- Miniratna I: Can invest up to ₹500 crore
- Strategic sale = majority stake + management control transferred
- Air India privatised: January 2022
- Air India sold to: Tata Sons for ₹18,000 crore
- Air India founded by: J.R.D. Tata (1932)
- Air India nationalised: 1953
- Disinvestment Department: DIPAM (Department of Investment and Public Asset Management)