Public Sector, Private Sector and Global Enterprises — OCM STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceOCMPublic Sector, Private Sector and Global Enterprises5 Marks
Question
What is public sector? explain in detail their characteristics.
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Answer
Public sector:
An enterprise, which is owned, managed and controlled by government is called a public sector enterprise. For example, Postal department, Indian Railways, $LIC$ of India, Indian Airlines, etc. are all examples of public enterprise.
The ownership of such units is either partially or fully in the hands of central government or state government. Such units can be either government department or part of it could be set up through the act of parliament
Characteristics of public sector:
$1.$ Aims at establishing basic industries:
The basic objective of establishing units in public sector is to provide base for accelerating those industries which require huge investment. Post-independence it was quite important for India to attain growth in industrialization to improve its economic condition.
Basic industries require huge investment for their set-up in the initial stage. However returns in initial years are quite low compared to the capital invested. As a result, private sectors were not much interested in setting up heavy industries.
Government invests in such industries with an objective to achieve faster economic growth.
$2.$ Elimination of monopoly:
By owning basic industries government can stop private units from creating monopoly.
$3.$ Balanced regional development:
Private enterprises are not interested in investing in backward areas whereas government can set-up industries in such areas and play an important role in developing them. For example, government established iron and steel industries in Rourkela, Bokaro, Bhilai etc. and developed these backwards areas.
$4.$ Objective of social welfare:
Generally, the objective of private sector is to maximize profit whereas public sector aims at achieving social welfare along with profit.
Moreover, all sections of society without any discrimination receive benefits from public sector. Speeding up industrialization leads to faster establishment of basic industries which ultimately welfares the entire society.
$5.$ Low profit:
When public sectors were first set-up they either made very less profit or loss.
However, government continued industries set-up in public sector. After 1991, government changed its policies and aimed at converting such industries into profit making units along with social welfare.
$6.$ Maintenance of national interest:
Public sector units also aim at interest of the nation. For example, the production of defence equipment is done by the government via. its public sector units. Since defence is a very confidential and sensitive issue, production of its equipment can be done only through government units.
$7.$ Generation of employment opportunities:
Countries like India which are developing and highly populated too need to provide employment to its population. Investment in public sectors boosts industrial growth and solves the problems of unemployment.
$8.$ Increase in economic development of the country:
Public sector industries create a base for industrialization which leads to economic development.
$9.$ Social and economic justice:
The management of public sector is in the hands of the government and hence public sector industries need to compulsorily follow government policies and regulations. Due to this reason we can see positive trend of providing free or concessional services, job security, better working conditions, importance to labour laws, priority to women, etc. in public sector units. This forces public sector units to provide social justice to the society.
$10.$ Ideal wages and facilities for employees:
As the ownership of public sectors rests with the government they pay decent wages to the workers. Employees of public sector get quite good facilities like conveyance, paid holidays, pension, etc. compared to private sector employees.
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