public sector: boon or bane

Topics: Economics, Industry, Public sector Pages: 5 (1292 words) Published: October 26, 2013
Public Sector Policies & Issues in Management Assignment

Is Public Sector A Boon Or Bane?
Definition: -
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. Public sector as a boon

(1) Employment: 
Various public sectors operating in India needs lot of manpower & this provide employment to unlimited individuals according to their education, experience & abilities. (2) Economic Development: 

Economic development mainly depends upon industrial development. Heavy & basic industries like iron & steel, shipping, mining, etc. are required for supplying raw materials to small industries. Huge capital is required for establishment of such heavy & basic industries. This capital required for these industries is easily & readily made available by public sector but it is practically not possible for a private sector to run these industries. (3) Sound Infrastructure:

Rapid industrial growth in a country needs sound infrastructure. Infrastructural industries require huge capital for construction of Roads, Railways, Electricity & many such industries. Private sector is unable to have such huge capital & that also without any high return but public sector can easily afford to provide all infrastructural facilities. (4) Protection to Sick Industries: 

Public sector, to prevent sick unit closing down, takes over their responsibility & prevent many people from getting unemployed not only this but it prevents unnecessary locking of capital, land, building, machinery, etc. (5) Regional Development:

Private sector usually neglect backward area. But public sector organizations set up their units in economically backward areas. By this public sector removes regional imbalance & brings regional development. (6) Government Control:

Public sector is wholly controlled & managed by the Board of Directors or other officers appointed by government. (7) Service Motive:
Public sector organizations are working with the only motive of providing public utility services to society at large irrespective of profit. (8) Monopoly:
Public sector is purely government monopoly. It does not face any type of competition from any private sector. Public sector is working on monopoly, semi-monopoly or oligopoly basis. (9) Modal Employer: 

Like a good parent, public sector is very much concerned with its employees. It take proper care of its employees & provides job security, sound wages, proper working conditions, training and welfare facilities. (10) Economies of Operation: 

Public sector due to its large scale operations enjoys economies of large scale operation. Public sector as a bane
(1) Inefficiency:
Inefficiency results due to the size of the organization.
(2) Incentives:
There is a lack of incentive for employees to perform if there is no share in the profit or there is an absence of other motivators such as productivity bonuses - accelerated promotion; (this factor can also apply in the private sector if the employee is not given any incentive to perform). (3) Interference:

Political interference can occur. They interfere with the free market forces. Hence, Public sector is a Boon to the Indian economy. The Public Sector Enterprises have been the mainstay of the Indian economy and were set up with the purpose to achieve self-sufficiency in production of goods/ services

serve the broad macro-economic objectives of higher economic growth facilitate long term equilibrium in balance of payments and
Ensure stability in...
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