The Public Sector in India

Abstract

The loud noises made by official spokesmen and in policy statements during the late 1940s and early 1950s notwithstanding, large-scale manufacture in the public sector was not seriously contemplated till the launching of the steel programme (especially the Bhilai steel plant) in 1955. The industrial policy statement of 1948 did classify large-scale industry into public and private sectors and held out the possibility of nationalisation within ten years of private units falling in the public list. As events turned out, private steel was not nationalised nor was private coal; railways had been nationalised before and during the Second World War and the private sector was not interested in them anyway. Airlines and the Reserve Bank were the solitary instances of nationalisation in the late 1940s. The Imperial Bank was taken over in 1955, life insurance in 1956. Earlier the Damodar Valley Corporation was set up in 1948 on the T.V.A. model, and the states were advised to set up statutory bodies for power and road passenger transport. Preliminary (or perfunctory) negotiations for a 500,000-ton steel plant at Rourkela started around 1952, but this solitary project could not be said to have set the public sector going; it began with German equity participation and precedents for this kind of venture were not altogether lacking.