Strategic sector (public enterprise policy)

Indian Economy glossary

Topic: Industrial Policy, Public Sector, MSMEs and Disinvestment · NCERT: Beyond NCERT

Meaning

Under the New Public Sector Enterprise Policy 2021, a strategic sector is one where the government keeps only a bare-minimum presence of public enterprises. It does this for security, economic or public-interest reasons. Within these sectors, the remaining CPSEs are privatised, merged with other CPSEs or closed. In non-strategic sectors, all CPSEs are to be privatised or closed. The policy has four strategic groups:

  • atomic energy, space and defence;
  • transport and telecom;
  • power, petroleum, coal and minerals;
  • banking, insurance and financial services.

Example

Banking is a strategic sector, so the government will keep a few public sector banks. It need not own as many as it does now; the rest can be merged or privatised. Air India was not in a strategic sector, so it was fully sold to the Tatas in January 2022.

Don't confuse with

  • Public-sector reservation: Reservation keeps an industry only for state firms. Today that covers just atomic energy (specified activities) and railway operations. In a strategic sector such as defence, private firms can also operate; the state simply keeps a minimum presence.

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