The public sector enterprises especially the State Electricity Boards were running in heavy losses. There were delays in completion of projects and increase in costs of the projects under the public sector. Because of monopoly the public sector undertakings did not try to reduce their costs or improve the quality of the goods and services, which they would have done in the presence of competition. Management of the public sector undertakings has been very inefficient. There has been low capacity utilization by the public sector undertakings. In 1999-2000, 58% of the firms had 75% or more capacity utilization. 13 % had 50-75% capacity utilization and as much as 29% of the firms were working under 50% of capacity utilization. But they have proved their usefulness by non profit contributions given below:

1. For creating a strong industrial base.
2. For developing infrastructure.
3. For developing backward areas.
4. To mobilize savings and earn foreign exchange.
5. To prevent concentration of economic power.
6. To promote equality of income and wealth distribution.
7. To provide employment.
8. To promote import substitution.