Question

Give a few examples of public sector activities and explain why the government has taken them up.

Answer 1

Economic activities can be classified into sectors on the basis of who is responsible for delivery of services and who owns assets.

Public Sector

• The government provides all the services and owns most of the assets in the public sector.
• Examples of public sector are Railways, Post Office etc.
• In the private sector, the objective is to earn profits, whereas in the public sector the objective is more than profits.
• To meet the expenses of the services rendered by the Government, it raises money through various measures including imposing taxes.

Public Sector Activities – Examples

• Some things are a requirement for the entire society but the private sector is incapable of providing those requirements due to costs that will be incurred for the same. The financial might required is above the capacity of the private sector players.
• In addition, private players will find it difficult to raise that kind of money from people, whereas the Government can do so, by imposing taxes.
• And even if private sector players manage to provide these services, they will end up charging a very high price for its usage from the public.
• Examples of such public sector activities are providing irrigation facilities, generating electricity through power plants (thermal, hydroelectric, nuclear), building roads, railways, harbours, bridges.
• The above mentioned activities are undertaken to benefit people across the nation, hence it requires tremendous amounts of investments.

Public Sector Activities – Government Must Support

In certain sectors, without Government support, the private sector cannot continue with their activities.

• For example, if the electricity is sold at the cost of generating the electricity, then it will have a huge impact on many industries, as the costs of their production will start rising.
• Many small scale industries will end up shutting down as they will not be able to bear the rising costs.
• Hence, the Government is involved in generating electricity and supplying electricity to all industries, at an affordable cost.
• Similarly, the Indian Government will buy rice and wheat from farmers at a ‘fair price’.
• Through ration shops, the Government sells it to consumers who are below poverty line and above poverty line at a much lower price. The food purchased by the Government will ultimately benefit the consumers and farmers. The purchased food will be stored in godowns by the Government.

Public Sector Activities – Government Must Spend

• There are many activities that are the primary and very important responsibility of the Governments.
• If the nation has to develop and progress in the right direction, the Government must spend on these activities.
• Good examples are providing healthcare and education facilities for all people.
• India has one of the largest illiterate populations in the world, to rectify this problem, the private sector alone cannot do it.
• People are spread far and wide across the country, even in many remote areas of India.
• Hence it is imperative that the Government provides elementary education to all.
• Providing elementary education is the duty of the Government, they must provide good schools and teachers.
• Government also needs to pay attention to aspects of human development such as nutrition, hygienic food, housing facilities for the poor, and availability of safe drinking water.
• Some of the regions of India have very high infant mortality rates, hence the Government must spend on the above mentioned areas.