Question

What are the importance of public sector?

Answer 1

Public sector plays a major role in the development of any economy. It has the following importance:

• Public Sector and Capital Formation:
  The role of the public sector in collecting, saving, and investing them during the planning period has been very important.
• Economic Development:

1. Economic development mainly depends upon industrial development.
2. Heavy and basic industries like Iron and steel, shipping, mining, etc. are required for supplying raw materials to small industries.

•  Balanced Regional Development:
  Public enterprises have developed the backward areas thereby bringing about a complete transformation in the socio-economic life of the people in these regions.
• Employment generation:

1. Public sector has created millions of jobs to tackle the unemployment problem in the country.
2. The number of persons employed during the year 2011 was 150 lake.

• Export Promotion and Foreign Exchange Earnings:

1. Some public enterprises have done much to promote India’s export.
2. The State Trading Corporation (STC). The Minerals and Metals Trading Corporation (MMTC) have done very well in export promotion.

• Protection to Sick Industries:

1. Public sector takes over the sick industries and prevents many people from getting unemployed.
2. It also prevents unnecessary locking of capital, land, building, machinery, etc.

• Import Substitution:

1. Some public sector enterprises were started specifically to save foreign exchange.
2. The ONGC, the Indian Oil Corporation Ltd., the Bharat Electronics Ltd., etc., have saved foreign exchange by way of import substitution.