1. Reservation of Industries

A clear-cut classification of industries (also known as the Reservation of Industries) were affected with three schedules:

(i) Schedule A

This schedule had 17 industrial areas in which the Centre was given complete monopoly. The industries set up under this provision were known as the Central Public Sector Undertakings (CPSUs) later getting popularity as ‘PSUs’. Though the number of industries were only 17, the number of PSUs set up by the Government of India went to 254 by 1991. These included those industrial units too which were taken over by the government between 1960

to 1980 under the nationalisation drives.2 These industries belonged to Schedules B and C (other than Schedule A).

(ii) Schedule B

There were 12 industrial areas put under this schedule in which the state governments were supposed to take up the initiatives with a more expansive follow up by the private sector. This schedule also carried the provisions of compulsory licencing. It should be noted here that neither the states nor the private sector had monopolies in these industries unlike Schedule A, which provided monopoly to the Centre.3

(iii) Schedule C

All industrial areas left out of Schedules A and B were put under this in which the private enterprises had the provisions to set up industries. Many of them had the provisions of licencing and have necessarily to fit into the framework of the social and economic policy of the state and were subject to control and regulation in terms of the Industries Development and Regulation (IDR) Act and other relevant legislations.4

The above classification of industries had an in-built bias in favour of government-owned companies (i.e., the CPSUs) which went according to the ideas of the planning process, too. Thus, expansion of the public sector became almost a directive principle of economic policy and the PSUs did expand in the coming times.5

It was this industrial policy in which the then PM Pandit Jawaharlal Nehru had termed the PSUs the ‘temples of modern India’, symbolically pointing to their importance.6 There was a time soon after Independence when the PSUs were regarded as the principal instrument for raising savings and growth in the economy.7 The rapid expansion of PSUs accounted for more than half of the GDP of the economy by 1988–89.8‌‌