February 21, 2024

HPAS/Allied Mains 2022 Answer Writing Challenge Day 205: Model Answer

Question: What have been the main roles of public sector in India? (8 marks/ 120 words)


Public sector is considered a powerful engine of economic development and an important instrument of self-reliance. The main contributions of public enterprises to the country’s economy may be described as follows:

i) Strong Industrial Base

Role of Public Sector in Development Public sector has significantly contributed to the GDP at factor cost. The share of industrial sector comprising of manufacturing, construction, electricity, gas, water supply has steadily increased during the planning decades. The government has strengthened the industrial base considerably by placing due emphasis on setting up of industries like iron and steel, heavy engineering, coal, heavy electrical machinery, petroleum, chemical, natural gas, chemicals, drugs fertilizers etc. Because of low profitability potential, these industries do not find-favour with private entrepreneurs in India.

ii) Capital Formation

The public sector fosters a powerful process of capital formation. It can collect the savings and make them investment in the productive channels. It is evident from Indian case. During two decades of our planning about 54% of total investment of India was done by the public sector. SBI, State Finance Corporation, LIC, UTI, etc have played an important role in collecting savings and mobilization of resource.

iii) Development of Infrastructure

The infrastructure is the backbone of an economy. The public sector plays the vital role in the process of infrastructural development. The public authority adopts the strategy to make sufficient expansion of irrigation facilities and power and energy, without which agricultural development is not possible. Without road, railways, and electricity no industrial development can be thought of. Public sector has developed the road, rail, air and sea transport system. The expansion has become manifold only due to the public sector. The public sector does not contribute much to the infrastructural development of the country.

iv) Fillings of Gaps

At the time of independence, there existed serious gaps in the industrial  structure of the country, particularly in the fields of heavy industries such as steel heavy, machine tools, exploration an refining of oil, heavy Electrical and equipment, chemicals and fertilizers, defense equipment, etc. Public sector has helped to fill up these gaps. The basic infrastructure required for rapid industrialization has been built up, through the production of strategic capital goods. The public sector has considerably widened the industrial base of the country.

v) Employment:

Public sector has created millions of jobs to tackle the unemployment problem in the country. Public sector accounts for about two thirds of the total employment in the organized industrial sector in India. By taking over many sick units, the public sector has protected the employment of millions. Public sector has also contributed a lot towards the improvement of working and living conditions of workers by serving as a model employer.

vi) Balanced Regional Development:

Public sector undertakings have located their plants in backward and untrodden parts of the county. There area lacked basic industrial and civic facilities like electricity, water supply, township and manpower. Public enterprises have developed these facilities thereby brining about complete transformation in the socioeconomic life of the people in these regions. Steel plants of Bhilai, Rourkela and Durgapur; fertilizer factory at Sindri, etc. are a few examples of the development of backward regions by the public sector.

vii) Contribution to Public Exchequer: The public sector has made increasing contributions to the public sector in the form of dividend, corporate taxes, excise and customs duty, etc.

viii)Foreign Exchange Earnings: Public sector has contributed a great deal in improving the balance of payments position of the country. The public enterprises have saved valuable foreign exchange through import substitution. e.g.  the Bharat Electronics Ltd exporting a large percentage of their output and earning foreign exchange.

ix) Development of Ancillary industries: There is a strong base of ancillary industries at several centers such as the Bokaro Industrial Complex, the Bhilai Steel Plant, The Rourkela Steel Complex, the Heavy Engineering Corporation at Ranchi, and the units of Bharat Heavy Electrical at Bhopal, Hyderabad and Hardwar.

x) Research and Development:

As most of the public enterprises are engaged in high technology and heavy industries, they have undertaken research and development programmes in a big way. Public sector has laid strong and wide base for self-reliance in the field of technical know-how, maintenance and repair of sophisticated industrial plants, machinery and equipment in the country.

xi) Community Development:

Several public sector undertakings have developed townships to provide all the civic amenities to their employees. These townships consist of houses, etc. Public enterprises have constructed roads and other infrastructural facility to link these townships to other parts of the country. Such townships have been very helpful in improving community life.

xii) Social Justice:

Public enterprises have contributed towards the achievement of constitutional objectives. They have been helpful in reducing the concentration of economic power in private hands, in curbing anti-social monopolies, in accelerating public control over the national economy and in bringing about a socialistic pattern of society. Public sector helps in ensuring inclusive process of development.

Conclusion: So, considering the above-mentioned role played by public sector, we can say that the public sector has made solid contributions to national self-reliance.

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