The Indian Government understood the importance of industries in India. The industrial policy undertaken on July 1991 by the Congress Government, have been designed to build on the past industrial achievements and to accelerate the process of making Indian industry internationally competitive, with a view to integrate the Indian economy with the world economy. The Industrial Policy of 1991 put more importance on expansion of the private sector to introduce liberalization. While our original industrial policies were characterized by state interventions and control in the industrial sector, the new industrial policy gave more emphasis on de-licensing and decentralization.
However the role of the public sector in Indian economic development cannot be denied altogether. Public sector has contributed to a great extent in building the infrastructure, employment generation, capital formation, industrialization etc. in India. In spite of the important role played by the public sector enterprises, in recent years there has been a decline in the popularity of the public sector enterprises due to their unsatisfactory performance, such us, low returns on capital, inefficient and corrupted management etc. made public Sector enterprises a growing burden on government exchequer.