What is a strategic sector and what is the implication of government classifying as a strategic sector?

It is estimated that the government may classify Banking and Insurance as strategic sectors in the Indian context and the announcement is expected in the next 15-20 days. It would begin with consolidation and eventually there would be only 4 PSU banks and 4 PSU insurance companies in India.

In addition, Indian Railways, oil and gas, defence, space, and atomic energy are also expected to be designated as strategic sectors. In each of these strategic sectors only up to 4 state-owned companies will be allowed and the rest will be merged or shut down.

Among the PSU banks, IOB, UCO, Bank of Maharashtra and Punjab and Sind Bank have been left out of any consolidation plan at this point of time and would continue to function as they are due to regional specialization. Insurance may go through similar approach.