Importance of Public Sector


This resource gives information about the importance of public sector.

Public sector plays a vital role in the development of any economy. Public sector being the monopoly in the hands of government is considered to be very important organization. It has following importance:-

(1) Economic Development: Economic development mainly depends upon industrial development. Heavy & basic industries like iron & steel, shipping, mining, etc. are required for supplying raw materials to small industries. Huge capital is required for establishment of such heavy & basic industries. This capital required for these industries is easily & readily made available by public sector but it is practically not possible for a private sector to run these industries.

(2) Regional Development: Private sector usually neglect backward area. But public sector organizations set up their units in economically backward areas. By this public sector removes regional imbalance & brings regional development.

(3) Employment: Various public sectors operating in India needs lot of manpower & this provide employment to unlimited individuals according to their education, experience & abilities.

(4) Service Motive: Public sector organizations are working with the only motive of providing public utility services to society at large irrespective of profit.

(5) Monopoly:Public sector is purely government monopoly. It does not face any type of competition from any private sector. Public sector is working on monopoly, semi-monopoly or oligopoly basis.

(6) Sound Infrastructure: Rapid industrial growth in a country needs sound infrastructure. Infrastructural industries require huge capital for construction of Roads, Railways, Electricity & many such industries. Private sector is unable to have such huge capital & that also without any high return but public sector can easily afford to provide all infrastructural facilities.

(7) Modal Employer: Like a good parent, public sector is very much concerned with its employees. It take proper care of its employees & provides job security, sound wages, proper working conditions, training and welfare facilities.

(8) Protection to Sick Industries: Public sector, to prevent sick unit closing down, takes over their responsibility & prevent many people from getting unemployed not only this but it prevents unnecessary locking of capital, land, building, machinery, etc.

(9) Government Control: Public sector is wholly controlled & managed by the Board of Directors or other officers appointed by government.

(10) Economies of Operation: Public sector due to its large scale operations enjoys economies of large scale operation.


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