Question

how does public sectar contributs to the economic devlopment of the nation

Answer 1

Share in National Income:

An important contribution to the National Income is Public Sector. During the period 1960 to 1999, the public sector has doubled its share in the national income in real terms and account for 25 percent of the total income of the economy. This is, undoubtedly, a significant change in the structure of economy in terms of the increased importance of the public sector in domestic activity.

Share in Capital Formation:

Another most important contribution of public sector in India has been in respect of capital formation. Investment in the private sector producing goods for rich people mainly should be evaluated lower than similar type of investment in the public sector which is engaged in the provision of essential infrastructural services to the economy as a whole. This is true even though the commercial profitability of the private sector is being rated high

Growth of Ancillary Industries:

Public Sector enterprises are helping the growth of ancillary industrious in numerous ways. These are as follows:

(1) They take responsibility for providing managerial and technical guidance on production process and equipment selection etc.

(2) Public Sector enterprises give long-term contracts to small ancillary industries.

(3) Public enterprises guide for sources of financing and procedure for obtaining them.

(4) Public enterprises have made efforts to purchase items from ancillary units.