Significance
of Public Sector
The
pattern of industrial growth depends on the relative roles of private and
public sector. Public sector means the part of the economy that is publicly
owned as distinct from those owned by private individuals or firms. It has a
number of absolutely essential functions.
By employing productive resources, the public sector
provides most of the public goods, like primary education, public health,
drinking water, social services, child nutrition, women and labour welfare,
social security, sanitation, poverty eradication, road, defence, etc. All of
them will facilitate the overall development of the economy and people.
As privately owned organizations or firms will not provide
these public goods, the public sector has to assume such responsibility. Thus,
the mixed economy consisting both the private sector and public sector, has
been the feature of many modern states.
The post-Independent Indian State assumed a greater role in
the reconstruction of the country that includes regulation, facilitation and
welfare promotion. To meet these requirements, the Indian State adopted the
public sector dominated, heavy industry based import substituting development
planning over five decades since independence.
Public sector is playing a significant role in terms of its
contribution to GDP in many developed as well as developing countries.
Much of the developing world in the early 1950s adopted an
inward oriented strategy of industrialization guided by the objective of self-reliance
and a philosophy of economic nationalism. The promotion of public sector
through development planning is basically used to direct the resources towards
optimum utilization and equitable distribution.
India too adopted similar development strategy of expanding
public sector to the commanding heights of the economy to meet the
constitutional obligation that 'the
material resources of the community are so distributed as best to subserve the common good'.
Since Independence, public sector played an important role
to be the principal driving force behind steady growth of the fifties, sixties
and seventies and eighties. The contribution of the public sector to national
income has increased from 7.5% in 1950-51 to 24% in 1982-83.
The contribution of the public sector through its basic,
heavy and strategic industries to the economy and its growth are very
significant. The role and contribution of the public sector in the development
of many sectors like manufacturing industry, agriculture, and infrastructure
and for the development of the whole private sector is noteworthy. The rapid
growth of public sector investment in industries has obviously created a strong
diversified industrial base.
All such contributions have helped the economy in many ways.
It has promoted small scale and ancillary industries as a
result of the backward and forward linkages.
It has promoted agro-based industries and supported
agriculture sector by providing many inputs like fertilizer, power, etc.
It has created a sound infrastructural base to help the
private sector.
Public sector has exerted a greater influence on the welfare
of the people through its vast employment opportunities.
However, all these development rationale have been
criticized since nineties by the proponents of market economy and private
sector. Still public sector plays many critical roles.
Related Topics
Privacy Policy, Terms and Conditions, DMCA Policy and Compliant
Copyright © 2018-2024 BrainKart.com; All Rights Reserved. Developed by Therithal info, Chennai.