An extract from equitymaster.com reproduced as below:
"It certainly does appear that the new government has settled into its job quite fast. A few reform announcements have already been made. The intent that is being communicated is even more encouraging. This government is certainly different from the last one in this crucial aspect. It wants to be seen as a force for positive change. This has definitely enthused industry and markets alike. Analysts are busy figuring out which sectors will benefit and in what way. There is one sector that should benefit the most from the new government's reforms: the PSU sector.
Public sector undertakings (PSUs) are companies from various sectors from airlines to steel which have a majority government ownership. Yet they are all plagued by similar problems. The most important one is a lack of autonomy of the management. It is common knowledge that the government interferes with the functioning of PSUs. The boards of directors are not able to assert themselves and the government usually has its way. Profitable PSUs are treated liked cash cows and milked by way of dividends and the unprofitable ones are not allowed the freedom to clean up their act. This results in a complete lack of accountability which negatively affects their financial performance. However, things may be changing for the better. Narendra Modi has always maintained that PSUs ought to be reformed by providing their managements more autonomy. This would certainly be a step in the right direction but how to go about it?"