Though public sector is very essential for industries, many public sector undertakings incur huge losses and are a drain on the economy's resources. Discuss the usefulness of public sector undertakings in the light of this fact.
Though public sector is very essential for industries, many public sector undertakings incur huge losses and are a drain on the economy's resources. Discuss the usefulness of public sector undertakings in the light of this fact.
Although, the inefficiency and low productivity in Public Sector Undertakings (PSUs) may lead to wastage of scarce resources and result in huge losses forming a constraint on economic resources of the country, they do have some advantages.
Public sector has been playing a very significant role in the economic development of India. Following points can validate this:
(i) Creation of a Strong Industrial Base: Public Sector Undertakings have contributed significantly towards the development of heavy and basic industries, thus creating a strong industrial base.
(ii) Development of Infrastructure: PSUs have helped in the development of infrastructure of the country. A developed infrastructure boosts the progress of private sector in the country.
(iii) Mobilisation of Savings: Government companies formed under PSUs mobilise the savings of individuals through the offer of shares, and use these savings for the economic development of the country.
(iv) Help to Earn Foreign Exchange: Many PSUs produce goods which can be exported. The export earnings of PSUs such as HMT, STC, etc have helped increase the flow of foreign exchange in the country. Also, PSUs such as BHEL, ONGC, etc helped the country to save on the import bill.
(v) Development of Backward Areas: PSUs are generally opened in backward areas so that these areas are also able to progress economically and equitably.
(vi) Generation of Employment Opportunities: PSUs have generated substantial employment opportunities and have helped to address the problem of poverty and unemployment.
(vii) To Promote Equality: PSUs check the concentration of power in few hands and promote equality in the country.
The above points reveal that PSUs play an important role in the economy of the country.
Although, the inefficiency and low productivity in Public Sector Undertakings (PSUs) may lead to wastage of scarce resources and result in huge losses forming a constraint on economic resources of the country, they do have some advantages.
Public sector has been playing a very significant role in the economic development of India. Following points can validate this:
(i) Creation of a Strong Industrial Base: Public Sector Undertakings have contributed significantly towards the development of heavy and basic industries, thus creating a strong industrial base.
(ii) Development of Infrastructure: PSUs have helped in the development of infrastructure of the country. A developed infrastructure boosts the progress of private sector in the country.
(iii) Mobilisation of Savings: Government companies formed under PSUs mobilise the savings of individuals through the offer of shares, and use these savings for the economic development of the country.
(iv) Help to Earn Foreign Exchange: Many PSUs produce goods which can be exported. The export earnings of PSUs such as HMT, STC, etc have helped increase the flow of foreign exchange in the country. Also, PSUs such as BHEL, ONGC, etc helped the country to save on the import bill.
(v) Development of Backward Areas: PSUs are generally opened in backward areas so that these areas are also able to progress economically and equitably.
(vi) Generation of Employment Opportunities: PSUs have generated substantial employment opportunities and have helped to address the problem of poverty and unemployment.
(vii) To Promote Equality: PSUs check the concentration of power in few hands and promote equality in the country.
The above points reveal that PSUs play an important role in the economy of the country.
