- Another way of classifying economic activities into sectors could be on the basis of who owns assets and is responsible for the delivery of services.
- In the public sector, the government owns most of the assets and provides all the services.
- In the private sector, ownership of assets and delivery of services is in the hands of private individuals or companies.
- Railways or post office is an example of the public sector whereas companies like Tata Iron and Steel Company Limited (TISCO) or Reliance Industries Limited (RIL) are privately owned.
- Activities in the private sector are guided by the motive to earn profits. To get such services we have to pay money to these individuals and companies.
- The purpose of the public sector is not just to earn profits. Governments raise money through taxes and other ways to meet expenses on the services rendered by it.
- Modern day governments spend on a whole range of activities. What are these activities? Why do governments spend on such activities? Let’s find out.
- There are several things needed by the society as a whole but which the private sector will not provide at a reasonable cost. Why? Some of these need spending large sums of money, which is beyond the capacity of the private sector. Also, collecting money from thousands of people who use these facilities is not easy. Even if they do provide these things they would charge a high rate for their use. Examples are construction of roads, bridges, railways, harbours, generating electricity, providing irrigation through dams etc. Thus, governments have to undertake such heavy spending and ensure that these facilities are available for everyone. There are some activities, which the government has to support.
- The private sector may not continue their production or business unless government encourages it. For example, selling electricity at the cost of generation may push up the costs of production of industries. Many units, especially small-scale units, might have to shut down. Government here steps in by producing and sup- plying electricity at rates which these industries can afford. Government has to bear part of the cost.
- Similarly, the government in India buys wheat and rice from farmers at a ‘fair price’. This it stores in its godowns and sells at a lower price to consumers through ration shops. The government has to bear some of the cost. In this way, the government supports both farmers and consumers.
- There are a large number of activities which are the primary responsibility of the government. The government must spend on these. Providing health and education facilities for all is one example. Running proper schools and providing quality education, particularly elementary education, is the duty of the government. India’s size of illiterate population is one of the largest in the world. Similarly, we know that nearly half of India’s children are malnourished and a quarter of them are critically ill.
- The infant mortality rate of Orissa (87) or Madhya Pradesh (85) is higher than that of the poorest regions of the world such as the African countries.
- Government also needs to pay attention to aspects of human development such as availability of safe drinking water, housing facilities for the poor and food and nutrition. It is also the duty of the government to take care of the poorest and most ignored regions of the country through increased spending in such areas.
Public and Private sectors
Last Updated : 20-04-2024 06:57:21
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