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In India, about 21.9 per cent people below poverty line that do not have access to even basic needs. There is wide disparity between the rich and the poor. It remains for the state to provide economic opportunities for the poor and socially disadvantageous people so that they too can go up the prosperity ladder. There is growing problem of unemployment in the economy. PSUs can play an instrumental role in this regard since the unemployment problem is growing. But the economic reforms in general and the disinvestment and privatization in particular, are creating an adverse impact on employment generation. The post-reform period is showing the reduction in employment which result in ultimately unemployment. Socially backward classes and castes would also pay heavy price of privatization. It seems that the existing privileges for these backward classes like SCs and STs would disappear in the post-disinvestment phase and thus depriving them the scope of social upliftment. Government should not go for straight-way disinvestment in all PSUs. PSUs which are doing extremely well should not be touched at all and in fact more operational autonomy should be given to do further. In short, profit-making PSUs should not be disinvested. PSUs which are facing certain problems be extended a well-designed packages asked to perform turnaround in a given time or else face the eventuality. PSUs which are beyond revival need to be either closed/ sold in a transparent manner so that further amounts of public money gets locked up immediately. It is more important to improve the system, to make it conductive to efficiency, productivity. To make PSUs respond effectively, the government will have to allow them to function as board managed companies. There PSUs have to be given greater functional autonomy with accountability in decision-making process. The interference by the bureaucracy and the political leadership must be minimized in favour of operational freedom. There is need for blending the socio-economic objectives with those of commercial objectives.