In the pre-reform period, public sector enterprises (PSEs) in India were established with various socio- economic objectives besides profit-making. They often operated in monopolistic or less competitive environments, suffered from bureaucratic inefficiencies, overstaffing, lack of accountability, and political interference. Consequently, many PSEs witnessed high inefficiency and subsidy requirements (A), leading to increased costs of production (B). A "high degree of profit" was generally not characteristic of the majority of PSEs during this period; many were loss-making or had low profitability.