Advertisements
Advertisements
Question
Though public sector is very essential for industries, many public sector undertakings incur huge losses and are a drain on the economy’s resources. Discuss the usefulness of public sector undertakings in the light of this fact.
Solution
Although, the mismanagement and wrong planning in PSUs may lead to misallocation and, consequently, to wastage of the scarce resources and finance but PSUs do have some positive and useful advantages.
1. Enhancing Nation’s Welfare: The main motive of the PSU was to provide goods and services that add to the welfare of the country as a whole. For example, schools, hospitals, electricity, etc. These services not only enhance welfare of country’s population but also enhance the future prospects of economic growth and development.
2. Long Gestation Projects: It was not feasible and economically viable for the private sectors to invest in the big and wide projects like basic industries and electricity, railways, roads, etc. This is because these projects need a very huge initial investment and have long gestation period. Hence, PSU is the most appropriate to invest in these projects.
3. Basic Framework: An important ideology that was inherited in the initial five year plans was that the public sector should lay down the basic framework for industrialisation that would encourage the private sector at the latter stage of industrialisation.
4. Socialist Track: In the initial years after independence, Indian planners and thinkers were more inclined towards socialist pattern. It was justified on the rational ground that if the government controls the productive resources and production, then it won’t mislead the country’s economic growth. This was the basic rationale to set up PSUs. These PSUs produce goods not according to the price signals but according to the social needs and economic welfare growth of the country.
5. Reduce Inequality of Income and Generate Employment Opportunities: It was assumed that in order to reduce inequalities of income, eradicate poverty and to raise the standard of living, government sector should invest in the economy via PSUs.
APPEARS IN
RELATED QUESTIONS
In 1948, Industrial Finance Corporation of India was formed for ______.
Explain the following statement with reason.
The quality of life and standard of living of Indian citizens is increasing.
Collect pictures of a few successful entrepreneurs.
From among the things we use in our daily life, identify those that are locally manufactured from those that are imported. Prepare a chart.
What is sectoral composition of an economy? Is it necessary that the service sector should contribute maximum to GDP of an economy? Comment.
Explain how import substitution can protect domestic industry.
Why and how was private sector regulated under the IPR 1956?
Which of the following steps promoted the growth of the economy as a whole by stimulating the development of industrial and tertiary sectors?
There were 29 industries under public sector out of which how many industries were under schedule A?
From the following given sets of statements in columns I and II, choose the correct pair of statements.
| Column I | Column II | ||
| A | Exports of goods and services | i | Excess of Exports of goods over the Imports of goods |
| B | Trade Surplus | ii | An element of invisible items |
| C | Current Transfers to rest of the world | iii | Recorded as a positive item in the BOP account |
| D | Portfolio Investments | iv | Foreign Institutional Investors |
Read the following hypothetical text and answer the given question:
India’s Micro, Small and Medium Enterprises (MSME) sector is poised for a mega transformation in 2020, with the launch of an Alibaba-like e-marketplace, trendy yet affordable khadi products to appeal to the masses and digital data-based credit ratings to help entrepreneurs avail loans. However, the MSME sector, often considered the bulwark of the economy as it contributes around 29% to the GDP and 48% to the Indian exports. There is an urgent need of major reforms and policy interventions towards ensuring timely availability of low cost credit, improving ease of doing business and technological up gradation, to take on the formidable challenge of creating millions of jobs, ensure equitable distribution of national income and achieving large-scale import substitution. The World Bank has recently approved loan worth $750 million to address the immediate liquidity and credit needs of India’s MSME sector that has been severely impacted by the Covid-19 crisis. This will give a push to the Atmanirbhar Bharat vision of the government.
Identify which of the following is not an advantage of the MSME sector?
Read the following hypothetical text and answer the given question:
India’s Micro, Small and Medium Enterprises (MSME) sector is poised for a mega transformation in 2020, with the launch of an Alibaba-like e-marketplace, trendy yet affordable khadi products to appeal to the masses and digital data-based credit ratings to help entrepreneurs avail loans. However, the MSME sector, often considered the bulwark of the economy as it contributes around 29% to the GDP and 48% to the Indian exports. There is an urgent need of major reforms and policy interventions towards ensuring timely availability of low cost credit, improving ease of doing business and technological up gradation, to take on the formidable challenge of creating millions of jobs, ensure equitable distribution of national income and achieving large-scale import substitution. The World Bank has recently approved loan worth $750 million to address the immediate liquidity and credit needs of India’s MSME sector that has been severely impacted by the Covid-19 crisis. This will give a push to the Atmanirbhar Bharat vision of the government.
Read the following statements - Assertion (A) and Reason (R)
Assertion (A): Small scale industries ensure a more equitable distribution of national income and wealth.
Reason (R): The ownership of small scale industries is more wide spread than the ownership of large scale industries.
Select the correct alternative from the following:
What are the reasons why traditional handicrafts industries were ruined under British rule?
Why was public sector given a leading role in industrial development during the planning period?
The public sector is very essential for industries, many public sector undertakings incur huge losses and are a drain on the economy's resources. What is the usefulness of public sector undertakings in light of this fact?
How many industries still need license for its operations?
Read the below case and answer the questions that follow:
The Centre on Saturday increased the budgetary allocation for the environment ministry from last fiscal by nearly five percent for 2020-21 with no change in the amount allotted to pollution abatement and climate change action plan. Union Finance Minister, Nirmala Sitharaman, allocated ₹3,100 crores for the ministry out of which ₹460 crores were allotted to control pollution, which is the same as the money it received in the last budget. Control of pollution has been conceptualized to provide financial assistance to Pollution Control Boards/Committees and funding to National Clean Air Programme (NCAP). Similarly, the budget for pollution abatement, which was cut by 50 percent last year from 2018-to 19, remained unchanged at ₹10 crores. The minister also announced that states, which are formulating and implementing plans for ensuring cleaner air in cities above one million population should be encouraged.
- Budget 2020: Allocation for Environment Ministry up 5% to ₹3,100 crore - Business Standards, 1st February 2020
Why is the policy implemented?
