Public sector plays a decisive role in a developing economy with the Central government identifying the critical areas of growth and investing heavily in these sectors in the initial phase of development. This is either on account of shortage of private capital or a general reluctance of the entrepreneurs to invest in the early years of development. In India, the importance of public sector for industrial development was well understood by the planners soon after independence. Huge government investments in areas like steel, mines, infrastructure, engineering, petroleum, chemicals, petrochemicals, pharmaceuticals and many others in the early stages of growth is a clear indication of this[u1] government concern. In the subsequent years, the government rightly realized that it should withdraw from areas like automobiles, electronics, hotel industry, bread, chemicals, petrochemicals, pharmaceuticals, etc. as sufficient private investments have already come into these sectors. While withdrawal of investments in most of these sectors make sense, the government should have been a little more careful as far as pharmaceutical sector is concerned. Two grand drug PSUs namely Hindustan Antibiotics Ltd and Indian Drugs and Pharmaceuticals Ltd, which laid the foundation for the Indian pharmaceutical industry more than five decades ago are in shambles today. The government virtually neglected these two PSUs as the private investments into pharma sector recorded a spectacular growth during the last 25 years. Most of the manufacturing plants of IDPL are shut down while one or two HAL plants are operating and may be able to revive fast with the government support. While it is justified in taking a stand that the government should be more of a facilitator and regulator than running industries, in the case of pharmaceutical industry, government need to play a proactive role in a country like India. This is because of life saving nature of the pharmaceutical product and its quality, price and availability are extremely critical for the masses than any other product. And India has been experiencing high prices and poor quality of several essential drugs of mass consumption quite frequently. A well run PSU has a vital role to play here. It can be a reliable source of supply for quality pharmaceuticals at reasonable prices. The Union chemicals minister’s decision to revive all the five units of IDPL in a phased manner, in this context, should be appreciated. The revival programme of IDPL plants are expected to commence from next month. And the government has to clear a detailed revival package involving several crores of rupees before that considering the state of the five IDPL plants. With a competent management team at the helm it should not be difficult for the government to run a pharmaceutical company, deliver quality pharmaceuticals and make reasonable profit. To meet the huge requirement of drugs and pharmaceuticals by the public hospitals and other health agencies the government should encourage public sector drug companies also instead of solely depending on private players.