Introduction:

The Government of Andhra Pradesh has dedicated itself to a policy of economic reforms and liberalization. This policy ensures higher economic growth rate and towards improving the living standards of the general public. As per the policy, the Government intends to moderate its involvement in the economic activities and concentrate more on education, healthcare, and good governance.

During the recent past, the public sector played an important role in the economic development of the state. State Level Public Enterprises (SLPEs) were set up to help develop Andhra Pradesh socially and economically. The contribution of the SLPEs was significant in industrial development, uplifting the weaker sections economically, creating employment opportunities, providing public amenities, health, education, etc. Credit goes to the public sector in providing amenities like electricity, transportation, healthcare, and irrigation even to the people living in remote parts of Andhra Pradesh. The SLPEs laid the foundations for entrepreneurship in the state by setting up state financial organizations such as APIDC, APSFC, etc. Some of the well-known industrial enterprises in the state including Dr.Reddy's Laboratories would not have come up with out the support from the state sponsored financial organizations. The SLPEs helped people living in rural areas to set up micro enterprises under self-employment schemes, by helping them upgrade their skills. The SLPEs also played a significant role in poverty alleviation programs organized by the Government.

However, over the years, the relapse in the performance of public sector enterprises has resulted in considering them to be a serious drag on the state’s economy. Today the SLPEs suffer from over manning and poor performance and are considered to dissipate the financial resources of the state. Andhra Pradesh houses nearly 40 Public Sector Enterprises where approximately 3.50 lakh people are employed. These enterprises hold over Rs.5242.46 Crores in paid-up share capital and over Rs.1,869 Crores in accumulated losses. The State Government is also a dominant shareholder in over 73 cooperatives, which include 18 sugar mills, 12 spinning mills and employing over 29,000 people. These cooperatives hold over Rs.1000 Crores in paid-up capital, and accumulated losses of over Rs.250 Crores. The gross equity investment by the State Government in the SLPEs by the end of 1999-2000 is nearly 4328.48 crores that constitute about 83% of the equity capital of the SLPEs. The balance equity of RS.913.98 crores is being raised from other sources, bulk of which is again from Central Government or Financial institutions. There is a negligible private investment in SLPEs. By the end of year 1999-2000, the gross debt extended by Government to SLPEs amounts to Rs.5387.96 crores. As against the declining efficiency of SLPEs, private enterprises have emerged as an alternative force to reckon with in Andhra Pradesh.