Public Enterprises

Topics: Government-owned companies in India, Industry, Oil and gas companies of India Pages: 9 (1897 words) Published: March 24, 2013
What are the Objectives of Public Enterprises?
In India, public enterprises have been assigned the task of realising the objectives laid down in the Directive Principles of State Policy. Public sector as a whole seeks: (a) to gain control of the commanding heights of the economy, (b) to promote critical development in terms of social gain or strategic value rather than on consideration of profit, and (c) to provide commercial surplus with which to finance further economic development. The main objectives of public enterprises in India are as follows: 1. Economic development:

Public enterprises were set up to accelerate the rate of economic growth in a planned manner. These enterprises have created a sound industrial base for rapid industrialisation of the country. They are expected to provide infrastructure facilities for promoting balanced and diversified economic structure of development. 2. Self-reliance:

Another aim of public enterprises is to promote self-reliance in strategic sectors of the national economy. For this purpose, public enterprises have been set up in transportation, communication, energy, petro-chemicals, and other key and basic industries. 3. Development of backward Areas:

Several public enterprises were established in backward areas to reduce regional imbalances in development. Balanced development of different parts of the country is necessary for social as well as strategic reasons. 4. Employment generation:

Unemployment has become a serious problem in India. Public enterprises seek to offer gainful employment to millions. In order to protect jobs, several sick units in the private sector have been nationalised. 5. Economic surplus:

Public enterprises seek to generate and mobilise surplus for reinvestment. These enterprises earn money and mobilise public savings for industrial development. 6. Egalitarian society:
An important objective of public enterprises is to prevent concentration of economic power and growth of private monopolies. Public sector helps the Government to enforce social control on trade and industry for ensuring equitable distribution of goods and services. Public enterprises protect and promote small scale industries. 7. Consumer welfare:

Public enterprises seek to protect consumers from exploitation and profiteering by ensuring supply of essential commodities at cheaper prices. They aim at stabilising prices. 8. Public utilities:
Private sector is guided by profit motive. Therefore, it is reluctant to invest money in public utility services like water supply, gas, electricity, public transport. Therefore, the Government has to assume responsibility for providing such services. 9. Defence:

Government has to set up public enterprises for production of defence equipment. Supply of such equipment cannot be entrusted for private sector due to the need for utmost secrecy. 10. Labour welfare:

Public enterprises serve as model employers. They ensure welfare and social security of employees. Many public enterprises have developed townships, schools, college and hospitals for their workers. Role and Rationale of Public Enterprises

The public sector has been playing a vital role in the economic development of the country. In fact the public sector has come to occupy such an important place in our economy that on its effective performance depends largely the achievement of the country's economic and social goals. Public sector is considered a powerful engine of economic development and an important instrument of self-reliance. The main contributions of public enterprises to the country's economy may be described as follows: 1. Filling of gaps:

At the time of independence, there existed serious gaps in the industrial structure of the country, particularly in the field of heavy industries. Basic and key industries require huge capital investment, involve considerable risk and suffer from long gestation periods. Private sector concerns do not come forward to establish...
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