Question

describe the role of public sector in the economic development of the country

5 marks​

Answer 1

Rapid industrialisation of a developing country like India depends upon the presence and creation of more basic infrastructure such as power, transportation, communication, irrigation, education, technical training etc. Most of the public sector enterprises were set up in these industries. The growth of the public sector in the field of iron and steel, petroleum and natural gas, coal, heavy engineering, heavy electrical machinery etc. has created a strong industrial base. Some public enterprises like STC and MMTC have contributed to export products from India substantially.

To reduce regional disparities in industrial development, public sector industries have been set up in undeveloped and underdeveloped regions of the country. All these activities contribute to the economic development of India.

Answer 2

Answer:

Here we detail about the following nine important roles played by public sector in Indian economy, i.e., (1) Generation of Income, (2) Capital Formation, (3) Employment, (4) Infrastructure, (5) Strong Industrial Base, (6) Export Promotion and Import Substitution, (7) Contribution to Central Exchequer, (8) Checking Concentration of Income and Wealth, and (9) Removal of Regional Disparities.

Explanation:

1. Generation of Income:

Public sector in India has been playing a definite positive role in generating income in the economy. The share of public sector in net domestic product (NDP) at current prices has increased from 7.5 per cent in 1950-51 to 21.7 per cent in 2003-04. Again the share of public sector enterprises only (excluding public administration and defence) in NDP was also increased from 3.5 per cent in 1950-51 to 11.12 per cent in 2005-06.

2. Capital Formation:

Public sector has been playing an important role in the gross domestic capital formation of the country. The share of public sector in gross domestic capital formation has increased from 3.5 per cent during the First Plan to 9.2 per cent during the Eighth Plan. The comparative shares of public sector in the gross capital formation of the country also recorded a change from 33.67 per cent during the First Plan to 50 per cent during the, Sixth Plan and then declined to 21.9 per cent in 2005-06.

4. Infrastructure:

Without the development of infrastructural facilities, economic development is impossible. Public sector investment on infrastructure sector like power, transportation, communication, basic and heavy industries, irrigation, education and technical training etc. has paved the way for agricultural and industrial development of the country leading to the overall development of the economy as a whole. Private sector investments are also depending on these infrastructural facilities developed by the public sector of the country.

5. Strong Industrial base:

Another important role of the public sector is that it has successfully build the strong industrial base in the country. The industrial base of the economy is now considerably strengthened with the development of public sector industries in various fields like—iron and steel, coal, heavy engineering, heavy electrical machinery, petroleum and natural gas, fertilizers, chemicals, drugs etc.

The development of private sector industries is also solely depending on these industries. Thus by developing a strong industrial base, the public sector has developed a suitable base for rapid industrialization in the country. Moreover, public sector has also been dominating in critical areas such as petroleum products, coal, copper, lead, hydro and steam turbines etc.