Question

Public sector units made a commendable contribution to the Indian economy in the early phase of planned development. Explain any four contributions of PSU's to the Indian Economy.

Explain any four ways by which public sector enterprises play a dominant role in an economy.

Answer 1

The major contributions of the public sector enterprises are as follows: 

1. Promotion of welfare: In India, 'socialistic pattern of society' has been regarded as the national goal. This goal calls for state participation in industrial and commercial enterprises to promote social welfare. In our economy, public sector enterprises are being used as an instrument to promote economic growth with social justice.
2. Infrastructure: Without the development of infrastructural facilities (such as transport, communication, power, irrigation, education, basic industries, etc.) economic development is not possible. These infrastructural facilities are developed only by the public sector of the country because private sector does not take interest in their development due to lack of resources and less profitability. During the Eleventh Plan (2007-12) about 43.4 per cent of the plan's total expenditure has been provided for the development of economic infrastructure and about 21 per cent of the total expenditure for the development of social services like health, education, housing etc. Public sector investment in infrastructure has paved the way for agricultural and industrial development.
3. Strong Industrial Base: Public sector enterprises take the responsibility of establishing basic heavy capital goods industries which require huge investment and high risk and have a long gestation period. Private sector does not take interest in such industries, which otherwise are very essential for the strong industrial base. There is no denying the fact that rapid industrialisation during the first three decades after independence was mainly due to the public sector. Thus, by developing a strong industrial base, the public sector has now opened the path of rapid industrialisation of the country.
4. Export Promotion and Import Substitution: Public sector enterprises have been contributing a lot for the promotion of India’s exports. This has resulted in foreign exchange earnings. In 2016-17 public sector exports stood at ¥ 87,620 crores as against just X 35 crores in 1965-66.