Though the public sector is very essential for industries, many public sector undertakings incur huge losses and are a drain on the economy’s resources. Discuss the usefulness of public sector undertakings in the light of this fact.
Although, the mismanagement and wrong planning in PSUs may lead to misallocation and, consequently, to wastage of the scarce resources and finance but PSUs do have some positive and useful advantages.
1. Enhancing Nation's Welfare: The main motive of the PSU was to provide goods and services that add to the welfare of the country as a whole. For example, schools, hospitals, electricity, etc. These services not only enhance the welfare of the country's population but also enhance the future prospects of economic growth and development.
2. Long Gestation Projects: It was not feasible and economically viable for the private sectors to invest in the big and wide projects like basic industries and electricity, railways, roads, etc. This is because these projects need a very huge initial investment and have a long gestation period. Hence, PSU is the most appropriate to invest in these projects.
3. Basic Framework: An important ideology that was inherited in the initial five year plans was that the public sector should lay down the basic framework for industrialisation that would encourage the private sector at the latter stage of industrialisation.
4. Socialist Track: In the initial years after independence, Indian planners and thinkers were more inclined towards socialist patterns. It was justified on the rational ground that if the government controls the productive resources and production, then it won't mislead the country's economic growth. This was the basic rationale to set up PSUs. These PSUs produce goods not according to the price signals but according to the social needs and economic welfare growth of the country.
5. Reduce Inequality of Income and Generate Employment Opportunities: It was assumed that in order to reduce inequalities of income, eradicate poverty and to raise the standard of living, the government sector should invest in the economy via PSUs.
Why was the public sector given a leading role in industrial development during the planning period?
Match the following:
1. Prime Minister 3. Quota 4. Land Reforms 5. HYV Seeds 6. Subsidy |
A. Seeds that give large proportion of output C. Chairperson of the planning commission D. The money value of all the final goods and services produced within the economy in one year. E. Improvements in the field of agriculture to increase its productivity F. The monetary assistance given by government for production activities. |
What is marketable surplus?
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Explain ‘growth with equity’ as a planning objective.
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Why and how was the private sector regulated under the IPR 1956?
Why should plans have goals?
Define a plan?
Why did India opt for planning?
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Who is a worker?
Explain the term ‘infrastructure’.
What is meant by environment?
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Why were reforms introduced in India?
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Name some notable economists who estimated India’s per capita income during the colonial period?
The three dimensional attack on poverty adopted by the govern-ment has not succeded in poverty alleviation in India. Comment.
Why are regular salaried employees more in urban areas than in rural areas?
The traditional handicrafts industries were ruined under the British rule. Do you agree with this view? Give reasons in support of your answer.
Indicate the volume and direction of trade at the time of independence.
Fill in the blanks
(a) First Five Year Plan of ________________ commenced in the year 1956. (Pakistan/China)
(b) Maternal mortality rate is high in _____________. (China/Pakistan)
(c) Proportion of people below poverty line is more in __________. (India/Pakistan)
(d) Reforms in ______________ were introduced in 1978. (China/Pakistan)
What was the two-fold motive behind the systematic de-industrialisation affected by the British in pre-independent India?
Suppose you are from a poor family and you wish to get help from the government to set up a petty shop. Under which scheme will you apply for assistance and why?
How has the consumption pattern of energy changed over the years?
Discuss the reforms which have been initiated recently to meet the energy crisis in India.
What problems are being faced by the power sector in India?