Sponsor Area

Private, Public And Global Enterprises

Question
CBSEENBS11003928

Explain the rationale of Public Enterprises.

Solution
The need for the establishment of public enterprises arises on account of the following reasons:-

 

Planned economic development

  • The national responsibility for planning is best entrusted to the government.
  • The need for planned development of the country has made it essential for the Government to establish and control business enterprises.

Sound industrial base

  • In order to develop a sound and large industrial base, the government has to set up large undertakings in various fields like power, mining, banking, finance fertilizers, steel, cement etc.
  • Private sector was unable and unwilling to enter these areas due to arge capital investment and heavy risks involved in them.

Surplus for economic growth

  • In order to meet its increasing economic and social obligations, the government requires huge amounts of funds. Taxation alone cannot always provide the required funds.
  • The Government established business enterprises with the hope that they will generate adequate surplus required for financing various schemes of development.

Development demands

  • The state has set up public enterprises in order to create demand for capital goods which are essential for economic development.
  • That is why the Government has set up undertakings in iron and steel, fertilizers, pesticides, chemicals, heavy engineering and machine tools.
  • The Government had to enter into more and more industries due to its public policy and commitments.

Generation of employment

  • In a country like India, unemployment is a major problem.
  • The public sector has been crated to provide jobs to millions of people.
  • Public enterprises help in expanding employment opportunities thereby reducing the unemployment problem.

National self-reliance

  • Public enterprise have been set up to ensure self-sufficiency in strategic sectors.
  • These enterprises design and develop indigenous technology to reduce dependence on foreign technology.
  • Public sector also helps to promote exports and promote import-substation so as to make the country self-reliant in term of foreign exchange.

Some More Questions From Private, Public and Global Enterprises Chapter

Explain the rationale of Public Enterprises.