Question

State the changing role of public sector.

Answer 1

As we know that in 1991 India opened up its economy and started the process of globalization. But also, through the same changes in economic policies, we embraced privatization. Up until then in the post-independence period, the public sector was an integral part of the development and progress of our country.

The government took the responsibility of investing huge capital in infrastructure and manufacturing industries. The private sector was not equipped to handle such immense projects with heavy capital inflow and long gestation periods. So the central and state governments relied on public enterprises to provide thee services to the economy.

The first few Five Year Plans were all designed to promote and safeguard the public sector. But then came the era of privatization and globalization in 1991. The role of public sector companies was reevaluated. Now the public sector was to actively participate in a competitive market with the private enterprises. Inefficiency and uninspired management were not tolerated.

The public sector was also held responsible for the huge losses of their companies. And so the role of public sector in our economy saw an overhaul. Let us take a look at the Changing Role of Public Sector

Answer 2

The changing role of public sector can be explained as follows:

Explanation: The public sector would build up infrastructure for other sectors of the economy and invest in key areas where as the private sector was unwilling to invest in projects which required heavy investment and long gestation periods. The following points highlight the same:

• Infrastructure development which includes focusing on core sector and giving direction to future investments.
• Regional Balance
• Economies of Scale