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By: Kulwinder Kaur,Parvesh Tulseja

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INTRODUCTION

The part of the economy concerned withproviding basic government services.The composition of the public sector variesby country, but in most countries the publicsector includes such services as the police,military, public roads, publictransit, primary education and healthcare forthe poor. The public sector might provideservices that non-payer cannot be excluded from(such as street lighting), serviceswhich benefit all of society rather than justthe individual who uses the service(such as publiceducation), and services that encourage equalopportunity.

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OBJECTIVESOFPUBLICSECTOR

To accelerate the industrial growth anddevelopment of the economy.

To build up a strong infrastructure forsupporting economic growth and development ofthe country.

To provide competition to the private sector forwelfare of the state and the public at large.

To generate employment and strive for removalof poverty.

To make investment in order to fill the gapbetween savings and investment.

To promote balanced and comprehensiveeconomic growth of the country.

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OBJECTIVESOFPUBLICSECTOR To redistribute income and wealth in order to

remove inequalities in society.

To make investment in those areas where theprivate sector is not willing to invest.

To promote the development of small and ancillaryindustries.

To focus on increasing exports of the country forearning foreign exchange and also to enter sectorswhere imports can be substituted by products

made in India. To help the govt in implementation of economic

policies and achieving objectives of five year plans.

To eliminate monopolies and prevent monopolistic

practices.

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PERCENTAGE SHAREOF PUBLICANDPRIVATE SECTORIN CAPITAL FORMATION

Plan Public Sector(in per cent)

Private Sector

(in per cent)First Plan 46 54

Second Plan 54 46Third Plan 63 37

Fourth Plan 61 39Fifth Plan 58 42Sixth Plan 53 47

Seventh Plan 48 52Eighth Plan 45 55Ninth Plan 33 67Tenth Plan 24 76

Eleventh (2007-12) 22 78

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SIGNIFICANCEOF PUBLIC SECTOR

Employment GenerationCapital FormationShare in GDPInfrastructure developmentStrong industrial baseExport promotionImport substitutionRemoval of regional disparitiesRaising internal resourcesGrowth of ancillary industriesSocial welfareCompetition to private sector

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PROBLEMSIN PUBIC SECTOR

Social welfare rather than profitmaximization

Lack of good management

Lack of autonomy to make decisionsregarding their own growth anddevelopment

Over-staffing and inefficiency of

employeesUnder-utilization of production capacity

Industrial disputes

Wrong pricing policies

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PROBLEMSIN PUBIC SECTOR

Political interference and corruptionObsolete technology

Over-capitalization

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SUGGESTIONSFORTHE

IMPROVEMENTOF PUBLIC SECTOR

Suitable reforms in the board ofdirectors. Politicians should not be

appointed as directors of these boards.Control over political interference

Appointment and selection of efficientemployees

Granting autonomyRegular inspection and auditing

Reforms in labour policy

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SUGGESTIONSFORTHE

IMPROVEMENTOF PUBLIC SECTOR

Increase in efficiency

Reforming pricing policies

Voluntary retirement SchemeUse of sophisticated technology

Revival of PSUs

Memorandum of understanding (MOU)

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CONCLUSION

The disinvestment programme has beencarried out by the government in ahasty manner. The outcome of

privatization so far as has beenpathetic. The stress should be onmaking PSUs work more efficientlyrather than reducing public ownership

in the economy.

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