The growth of public enterprises in size and diversity, making them play an increasing important role in shaping the pace and the pattern of the national economy has been traced to the entrepreneurial efforts of the Government in line with Industrial Policy Resolutions, nationalizations and taking over of private sector sick units. The importance of the price policy of public enterprises vis-à-vis the role assigned to them has been examined in relation to their public and private profitability in conformity with the nature of their cost structure so as to effectively tackle the issues of non-commercial costs, inefficiencies at the project and the operational stage, planned and unplanned excess capacities and investments on considerations of long-term economic growth complicating formulation of an appropriate price policy of public enterprises and their objective performance evaluation. On the basis of cost exclusions and inclusions, replacement cost depreciation and a rate of return on adjusted capital base, a model of costs has been structured to form a basis for pricing in a non-competitive set up so as to simultaneously fulfil the interests of the enterprise, the appraiser, the consumer, the management and the overall interest of the economy by promoting efficient resource allocation, resource generation, distributional improvements, regional balance, price stabilization, efficiency in operations accompanying technological improvements and generation of employment. It is through the pricing based on a normative cost structure formulated at optimum level of efficiency and introducing transparency in their performance reporting that public enterprises can serve as an effective instrument of equitable growth at a faster rate and discharge their responsibilities to the nation which their commanding heights bestow on them.

Growth of Drugs and Pharmaceutical Industry is crucial to the health care of people in a country where despite high incidence of disease the per capita expenditure on drugs is less than 5 per cent of that in many developed countries. The basic thrust of Drugs and Pharmaceuticals Policy in India is, therefore, to make adequate quantity of quality drugs available to the poor masses at affordable prices. Despite the rigid control by the government in respect of product-mix, pricing of bulk drugs and formulations and profitability of producing enterprises, the Indian drugs and pharmaceutical industry has grown significantly, though not sufficiently, since independence. Production of formulations increased from a mere Rs. 35 crore in 1952 to Rs. 3600 crore in 1990-91 and that of bulk drugs increased from Rs.15 crore in 1962 to Rs.700 crore in 1990-91. Even then, with 15 per cent of world population, India is producing only 2 per cent of world drug production. Production generally lagged behind the plan targets mainly due to rigid controls on the industry. Preventing profiteering in an industry which produces for basic health care of the people is unobjectionable, but simultaneously the price of essential drugs required on a large scale should be remunerative enough, so that consumer protection is ensured all round in terms of availability, quality and price. An attempt to keep control prices of drugs low has sharply eroded the industry's earnings even below the level prescribed by the government and drove many companies to diversify into non-pharma activities. In the process, several critical drugs needed by the common man could not be indigenously produced in sufficient quantities. The shortages emerged and large scale imports were resorted to. The present study relating to production, consumption, import/export, R&D, Pricing and Profitability of the public and private sector drugs and pharmaceutical industry has been supplemented with 50 tables and official reports/orders such as Kelkar Committee Reports, DPCO 1987 etc.

Growth of fertilizer Industry is crucial to the growth of agriculture. The government has, therefore, been encouraging creation of fertilizer capacities by granting remunerative 'Cost plus' differential retention prices to the producers, and promoting fertilizer application by giving price and non-price incentives to the farmers. As a result, total production of fertilizers increased from a meager 27 thousand tones in 1951-52 to about 10 million tons in 1992-93, and per hectare fertilizer consumption grew from 0.55 kg. to about 73 kg. during the same period. India is now fourth, both in total fertilizer consumption as well as production, only after the U.S.A., the former U.S.S.R. and China. Of course, in term of per capita consumption the country still lags far behind indicating that a lot is yet to be done in the area of production, demand promotion, use efficiency, credit arrangement and distribution of fertilizers so that right type of fertilizers reach the right farm at the right time and at the right price which protects the interest of the industry, the farmer and the public in general in terms of stable prices of foodgrains at affordable level. An attempt to take care of all these interests has resulted in mounting fertilizer subsidies which aggregated to about Rs.32000 crore during 1979-80 to 1991-92. This has created the problem of budget balancing, and of late, the government is moving in the direction of reducing fertilizer subsidies. The above issues have been studied in depth and the impact of policies pursued so far for promoting fertilizer production and optimizing fertilizer production and optimizing fertilizer consumption has been analysed in the light of recommendations of various committees and their impact on the profitability of fertilizer industry in the public, private and cooperative sectors. In general, the policies adopted so far have worked well and the country has succeeded is not only attaining self-sufficiency in foodgrains but has also generated exportable surplus in 1993.

Cement is the key to construction activity which generates one of the highest employments per unit of investment. In India, cement production has grown from 2.2 m.t. in 1950-51 to 53.6 m.t. in 1991-92, and country now occupies the fifth position in the world both as regards cement production and consumption. The growth of the cement industry was very slow till 1981 due to rigid price and distribution controls in operation since independence. Though retention prices, on paper, provided for fixed and variable costs plus a reasonable return on capital, in practice, the targeted profits were seldom realized and there were even losses due to underutilizations, inefficiencies and uncompensated cost escalations. It is only after partial decontrol in 1982 that the industry's production and profitability got a boost. Cement supply overtook the demand during 1988-89. No wonder, the government found it appropriate to decontrol cement prices w.e.f. March 1, 1989, though an informal governmental influence on prices and distribution still prevails. The period of 1990-91 and the first half of 1991-92 had been, by far, the best for the cement industry in terms of production and profitability. Profits during this period marked a disproportionate increase attracting MRTP enquiry against carteling and creation of artificial shortages. In addition, a squeeze, in governmental purchases, which account for one-third to two-fifth of the total cement demand, is exercising a dampening influence on prices and profits since mid 1991-92, though the long term prospects are encouraging due to expanding domestic and foreign demand. However, this requires that the profitability of the industry must be based on higher capacity utilisation, cost economics in energy use through technological upgradation, efficiency in packaging and handling, and improvement in infrastructural support rather than profiteering. These issues relating to the cement industry have been discussed and analysed in the book with the help of more than a hundred statistical tables and 22 appendices.