Public Sector Undertakings (PSUs) in Core Industries
Indian Economy
- PYQs8
- Articles1
Background
UPSC often examines the performance, challenges, reforms, and strategic importance of PSUs in India's economic development, their contribution to public finance, and their role in achieving national objectives and industrial self-reliance.
Public Sector Undertakings (PSUs) are government-owned corporations established to operate in strategic sectors, provide essential services, and drive economic growth. They play a crucial role in India's core industries like mining, steel, energy, and infrastructure, often undertaking large-scale capital-intensive projects that may not attract private investment due to long gestation periods or lower profitability.
Facts & tables
- Key PSUs involved
- NMDC (mining) and Rail Vikas Nigam (RVNL - railway infrastructure) are state-owned entities.
- Strategic Investments
- NMDC plans ₹50,000 crore investment to enhance iron ore mining capacity to 100 million tonnes by 2030.
- Infrastructure Development
- RVNL awarded a ₹2,977 crore contract to establish a blending yard in Visakhapatnam for NMDC.
- Economic Contribution
- PSUs contribute significantly to India's GDP, employment, and industrial output, especially in critical sectors.
| Type | Reference |
|---|---|
| Conceptual area | Indian Economy |
| Body | Role |
|---|---|
| NMDC | Implements |
| Rail Vikas Nigam (RVNL) | Implements |
Prelims angle
Prelims angle: Conceptual understanding
Prelims angle: Application of economic principles
- Government-owned entities in strategic sectors.
- Drive economic growth, employment, infrastructure.
- NMDC (mining) and RVNL (rail infrastructure) are examples.
- Significant capital investments (e.g., ₹50,000 cr by NMDC).
- Impact on public finance and industrial output.
| Year | Framing tags |
|---|---|
| 2025 | Conceptual understanding, Application of economic principles |
| 2025 | Multi-statement analysis, Institutional roles and functions |
| 2023 | Multi-statement analysis, Factual recall |
| 2021 | Conceptual understanding, Cause and effect relationships |
| 2019 | Statement-based questions, Factual recall |
| 2018 | Factual recall, Multi-statement analysis |
| 2018 | Statement-based questions, Factual recall |
| 2018 | Conceptual understanding, Application of economic principles |
Timeline
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Indian Economy
Conceptual area
-
Prelims 2018
Factual recall, Multi-statement analysis
-
Prelims 2018
Statement-based questions, Factual recall
-
Prelims 2018
Conceptual understanding, Application of economic principles
-
Prelims 2019
Statement-based questions, Factual recall
-
Prelims 2021
Conceptual understanding, Cause and effect relationships
-
Prelims 2023
Multi-statement analysis, Factual recall
-
Prelims 2025
Conceptual understanding, Application of economic principles
-
Prelims 2025
Multi-statement analysis, Institutional roles and functions
-
RVNL to shape NMDC’s branded iron ore plans with ₹3,000 crore blending yard
PSUs are government-owned entities crucial for India's core industries and infrastructure. They undertake large-scale projects, contribute to economic growth, and impact public finance through investments and revenue generation.
See also
No related topics linked yet.
Past papers
2018–2025 · 8 questions
In the news
RVNL to shape NMDC’s branded iron ore plans with ₹3,000 crore blending yard
PSUs are government-owned entities crucial for India's core industries and infrastructure. They undertake large-scale projects, contribute to economic growth, and impact public finance through investments and revenue generation.
Try these PYQs
If a commodity is provided free to the public by the Government, then
Opportunity cost: It refers to the potential benefit an individual or entity gives up when choosing one option over another. In simpler terms, it's what you miss out on by making a specific choice. Free commodity by the government: When the government provides a good or service for free, it doesn't eliminate the opportunity cost. The resources used to provide that free good could have been used for something else. Taxpayers bear the burden: The resources for "free" public goods come from somewhere, usually taxpayer money. So, the opportunity cost isn't eliminated, it's simply shifted. Taxpayers give up the potential use of those resources in exchange for a free good or service. In essence, while the individual consumer might not directly pay for the good, the cost is still there and borne by the tax-paying public.
With reference to the governance of public sector banking in India, consider the following statements
1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
2. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.
Which of the statements given above is/are correct?
Statement 1 is incorrect. The govt has been infusing large amounts in seven public sector banks through recapitalisation bonds but this has not been steady as statement 1 says. Statement 2 is correct. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected. For example, the merger of SBI associate banks will result in the creation of a stronger merger entity. Hence, option C is the correct answer.
With reference to India’s Five-Year Plans, which of the following statements is/are correct?
1. From the Second Five-Year Plan, there was a determined thrust towards substitution of basic and capital goods industries.
2. The Fourth Five-Year Plan adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power.
3. In the Fifth Five-Year Plan, for the first time, the financial sector was included as an integral part of the Plan.
Select the correct answer using the code given below.
* Derived from Russia, India used the concept of the Five-Year Plan for economic planning. * With the first five-year plan launched in 1951, India now has a total of 12 such plans. However, the practice was called off in 2017 by the Narendra Modi-led NDA government. * The Second Plan focused on the industrial development of the country and stressed capital goods industries. * The Fourth Plan was focused on growth with stability and progressive achievement of self-reliance. The plan focused on eliminating poverty with the slogan of Garibi Hatao given during the 1971 elections by Indira Gandhi. * The Fifth Plan gave top priority to agriculture, employment, and poverty alleviation.
Suppose the revenue expenditure is ₹80,000 crores and the revenue receipts of the Government are ₹60,000 crores. The Government budget also shows borrowings of ₹10,000 crores and interest payments of ₹6,000 crores. Which of the following statements are correct?
I. Revenue deficit is ₹20,000 crores.
II. Fiscal deficit is ₹10,000 crores.
III. Primary deficit is ₹4,000 crores.
Select the correct answer using the code given below.
Revenue Deficit, Fiscal Deficit, and Primary Deficit are key indicators used to assess a government's financial health. ✅ I. Revenue Deficit = ₹20,000 crores – Correct * Definition: Revenue Deficit = Revenue Expenditure − Revenue Receipts
* Calculation: ₹80,000 crores − ₹60,000 crores = ₹20,000 crores ✅ II. Fiscal Deficit = ₹10,000 crores – Correct * Definition: Fiscal Deficit = Total Expenditure − Total Receipts (excluding borrowings)
* Alternatively, it reflects total borrowings needed to meet the gap
* Given: Borrowings = ₹10,000 crores ⇒ Fiscal Deficit = ₹10,000 crores ✅ III. Primary Deficit = ₹4,000 crores – Correct * Definition: Primary Deficit = Fiscal Deficit − Interest Payments
* Calculation: ₹10,000 crores − ₹6,000 crores = ₹4,000 crores
With reference to the Government of India, consider the following information:
| Organization | Some of its Functions | It Works Under |
|--------------------|------------------------|--------------------------------|
| Directorate of Enforcement | Enforcement of the Fugitive Economic Offenders Act, 2018 | Internal Security Division-I, Ministry of Home Affairs |
| Directorate of Revenue Intelligence | Enforces the provisions of the Customs Act, 1962 | Department of Revenue, Ministry of Finance |
| Directorate General of Systems and Data Management | Carrying out big data analytics to assist tax officers for better policy and nabbing tax evaders | Department of Revenue, Ministry of Finance |
In how many of the above rows is the information correctly matched?
The question relates to the correct mapping of key investigative and analytical bodies under the Government of India and their parent ministries or departments. ❌ Row I: Incorrect The Directorate of Enforcement does implement the Fugitive Economic Offenders Act, 2018, but it functions under the Department of Revenue, Ministry of Finance, not the Ministry of Home Affairs. ✅ Row II: Correct The Directorate of Revenue Intelligence (DRI) enforces the Customs Act, 1962 and works under the Department of Revenue, Ministry of Finance. ✅ Row III: Correct The Directorate General of Systems and Data Management aids in big data analytics for tax enforcement and operates under the Department of Revenue, Ministry of Finance.
Show 3 more PYQs
Consider the following statements :
Statement-I : India accounts for 3.2% of global export of goods.
Statement-II :Many local companies and some foreign companies operating in India have taken advantage of India's 'Production-linked Incentive' scheme.
Which one of the following is correct in respect of the above statements?
* Statement I is incorrect: India's share in global merchandise trade is only 1.8% and 4% in global services. India plans to increase its export share in global trade from 2.1% to 3% by 2027 and 10% by 2047. * Statement II is correct: The PLI scheme is open to both domestic and international manufacturers. Samsung as well as Indian firms such as Dixon Technologies, UTL, Neolyncs, Lava International, Optiemus Electronics and Micromax are also expanding their factories to take advantage of the PLI scheme.
Consider the following statements
1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.
2. The Government does not impose any customs duty on all the imported edible oils as a special case.
Which of the two statements given above is/are correct
Statement 1 is correct. Domestic production of edible oil in 2018 was around 100 Lakh Metric tons (LMT) while import was around 150 LMT. Statement 2 is incorrect. The Government of India does impose customs duties on imported edible oils. The rates of these duties may vary depending on various factors, including the type of edible oil, international market conditions, and government policies aimed at promoting domestic production or protecting domestic producers.
Which one of the following effects of creation of black money in India has been the main cause of worry to the Government of India?
A. Diversion to Real Estate: While this can happen, it still involves some economic activity and might generate taxes (though potentially not on the full value of the transaction if black money is used). B. Investment in Unproductive Activities: This can hurt the economy, but the government loses tax revenue regardless of the type of investment if it's funded by black money. C. Donations to Political Parties: This is a concern, but the lost tax revenue likely outweighs the impact of such donations. D. Loss of Revenue: Black money, by definition, avoids taxes. This directly reduces the government's income, limiting its ability to fund public services, infrastructure, and social welfare programs. Tax evasion through black money creation significantly hinders the government's ability to function effectively and meet the needs of its citizens. This is why it's a major concern.