Question

Explain how the public sector contributes to the economic development of a nation.

Answer 1

• 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.
• 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.
• 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.