PUBLIC SECTOR

By: Kulwinder Kaur, Parvesh Tulseja

INTRODUCTION The part of the economy concerned with

providing basic government services. The composition of the public sector varies by country, but in most countries the public sector includes such services as the police, military, public roads, public transit, primary education and healthcare for the poor. The public sector might provide services that non-payer cannot be excluded from (such as street lighting), services which benefit all of society rather than just the individual who uses the service(such as public education), and services that encourage equal opportunity.

OBJECTIVES OF PUBLIC SECTOR To accelerate the industrial growth and

development of the economy. To build up a strong infrastructure for

supporting economic growth and development of the country.

To provide competition to the private sector for welfare of the state and the public at large.

To generate employment and strive for removal of poverty.

To make investment in order to fill the gap between savings and investment.

To promote balanced and comprehensive economic growth of the country.

OBJECTIVES OF PUBLIC SECTOR To redistribute income and wealth in order to

remove inequalities in society. To make investment in those areas where the

private sector is not willing to invest. To promote the development of small and

ancillary industries. To focus on increasing exports of the country

for earning foreign exchange and also to enter sectors where imports can be substituted by products made in India.

To help the govt in implementation of economic policies and achieving objectives of five year plans.

To eliminate monopolies and prevent monopolistic practices.

PERCENTAGE SHARE OF PUBLIC AND

PRIVATE SECTOR IN CAPITAL FORMATION

Plan Public Sector(in per cent)

Private Sector(in per cent)

First Plan 46 54

Second Plan 54 46

Third Plan 63 37

Fourth Plan 61 39

Fifth Plan 58 42

Sixth Plan 53 47

Seventh Plan 48 52

Eighth Plan 45 55

Ninth Plan 33 67

Tenth Plan 24 76

Eleventh (2007-12)

22 78

SIGNIFICANCE OF PUBLIC SECTOR

Employment Generation Capital Formation Share in GDP Infrastructure development Strong industrial base Export promotion Import substitution Removal of regional disparities Raising internal resources Growth of ancillary industries Social welfare Competition to private sector

PROBLEMS IN PUBIC SECTOR

Social welfare rather than profit maximization

Lack of good management Lack of autonomy to make decisions

regarding their own growth and development

Over-staffing and inefficiency of employees

Under-utilization of production capacity Industrial disputes Wrong pricing policies

PROBLEMS IN PUBIC SECTOR

Political interference and corruption Obsolete technology Over-capitalization

SUGGESTIONS FOR THE IMPROVEMENT OF PUBLIC SECTOR

Suitable reforms in the board of directors. Politicians should not be appointed as directors of these boards.

Control over political interference Appointment and selection of efficient

employees Granting autonomy Regular inspection and auditing Reforms in labour policy

SUGGESTIONS FOR THE IMPROVEMENT OF PUBLIC SECTOR

Increase in efficiency Reforming pricing policies Voluntary retirement Scheme Use of sophisticated technology Revival of PSU’s Memorandum of understanding (MOU)

CONCLUSION

The disinvestment programme has been carried out by the government in a hasty manner. The outcome of privatization so far as has been pathetic. The stress should be on making PSU’s work more efficiently rather than reducing public ownership in the economy.

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