Explain how public sector contributes to the economic development of a nation.
There are some activities, which the government has to support. For example, selling electricity at the cost of generation may push up the costs of production of industries. Many units, especially small-scale units, might have to shut down. Government here steps in by producing and supplying electricity at rates which these industries can afford. Government has to bear part of the cost. Similarly, the government in India buys wheat and rice from farmers at a ‘fair price’. This it stores in its godowns and sells at a lower price to consumers through ration shops. In this way, the government supports both farmers and consumers.
The private sector may not continue their production or business unless the government contributes in the above mentioned ways.
There are some activities, which the government has to support. For example, selling electricity at the cost of generation may push up the costs of production of industries. Many units, especially small-scale units, might have to shut down. Government here steps in by producing and supplying electricity at rates which these industries can afford. Government has to bear part of the cost. Similarly, the government in India buys wheat and rice from farmers at a ‘fair price’. This it stores in its godowns and sells at a lower price to consumers through ration shops. In this way, the government supports both farmers and consumers.
The private sector may not continue their production or business unless the government contributes in the above mentioned ways.
