ABSTRACT
This chapter discusses the financial data of public enterprises, in Pakistan and India, to see if any clear criteria seem to underlie the evolution of their equity-loan proportions. The equity-loan ratio is a shorthand expression of the way in which the enterprise makes up its capitalisation, partly with equity funds and partly with loan funds. It would be interesting to enumerate categories of situations in the public enterprise sector, in which the justification for equity is heavily outweighed by its effects of suppressing costs and of entailing unnoticed impacts on the public exchequer. An interesting instance of equity being used as a technique of giving cost relief to a public enterprise is provided by Pakistan Industrial Development Corporation set up in 1950. The chapter concludes the statistical exercise with an enquiry into how heavy, in relative terms, interest charges have been for enterprises standing at different points on the scale of equity-loan ratio.
