Discuss the role and rationale of public enterprises in India.
Answers
Answer:
Development demands
The state has set up public enterprises in order to create demand for capital goods which are essential for economic development. That is why the Government has set up undertakings in iron and steel, fertilizers, pesticides, chemicals, heavy engineering and machine tools.
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The creation and growth of state (public) sector of business is designed as an instrument of social control. For a developing country public enterprises have become a key factor for the planned and balanced growth. A.H. Hanson rightly observes that, “Public enterprise without a plan can achieve something but a plan without public enterprise is likely to remain on paper.”
Public enterprises (PEs) are institution operating service of an economic or social character or behalf of government. The main attributes of public sector enterprises are: state ownership, state control and management, public accountability, non profit motive, state privileges and regulations.
In India, public sector enterprises are of three types: departmental undertaking, public corporation and Government Company. In most of the countries, the roles of PEs are justified from social point of view. In many cases PEs are not economically viable but socially desirable.
At present, the wave of privatization has challenged the PEs’ managers to run the business on economic lines and earning the profit. Definitely in India, now after 50 years of independence there is need of economic viability for PEs. Managers of public sector should serve the society but after running the business on profit.
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