INDIA’S INDUSTRIAL ECONOMY UNIT 4

INDUSTRY- IT IS A SECTOR THAT PRODUCES GOODS OR SERVICES WITHIN AN

ECONOMY.

TYPES OF INDUSTRY

A. PRIMARY INDUSTRY- THE INDUSTRIES WHICH ARE ESTABLISHED & ENACTING

A PRODUCTION PROCESS WITH THE HELP OF NATURAL RESOUCRES EX- AGRO
BASED

B. GENETIC INDUSTRY- INDUSTRIES WHICH ARE ENGAGED IN REPRODUCTION

OF PLANTS AND ANIMALS THESE INDUSTRIES ARE ENGAGED IN ACTIVITIES SUCH
AS ANIMAL BREEDING CATTLE BREEDING ETC

C. EXTRACTIVE INDUSTRY- CONSIST OF ANY OPERATIONS THAT EXTRACT RAW

MATERIALS FROM EARTH EX- METALS MINERALS

D. MANUFACTURING INDUSTRY – ARE THOSE THAT ENGAGE IN THE

TRANSFORMATION OF GOODS, MATERIALS INTO NEW PRODUCTS

E. CONSTRUCTION INDUSTRY – WHICH WILL BE ENGAGED IN CONSTRUCTION

ALL KINDS BUILDINGS, ROADS OR DAMS ETC

F. SERVICE INDUSTRY- BUT NOT INVOLVED IN MANUFACTURIG THESE WORK

FOR CUSTOMES AND PROVIDE GOODS. INDUSTRIES WHICH PROVIDES SERVICES
EX HOSPITALS TRANSPORTATION

STRUCTURE OF INDIAN INDUSTRY

PUBLIC SECTOR- INDUSTRIES WHICH ARE OWNED AND MANAGED BY GOVT

In other words, Public sector refers to all the industrial and commercial
enterprises which are owned by the government itself or by some other agency
on behalf of the government. Public sector enterprises are these enterprises
which are owned managed and operated by the government-central, state or
local.

FORMS OF PUBLIC SECTOR

Department Enterprises-These enterprises are under the direct ownership and
control of the Central Government. EX- Indian Railway, Atomic power, Post and
Telegraphs.

Public Corporations- These are established after passing a bill in the Parliament
for e.g., Life Insurance Corporation, Reserve Bank of India, Indian Airline
Corporation, Industrial Finance Corporation of India, etc.

Government Company- It is established under Indian Companies Act 2013. EX-

Hindustan Machine Tools Ltd, Bharat Electronics Ltd, Central Electronics Ltd, etc.

Holding Company- It is established through the integration of government

Authority of India Limited has been set up through the integration of steel
plants at Bhilai, Rourkela, Bokaro, Durgapur etc.

Need of Public Sector in India

ACCLERATION OF ECONOMIC GROWTH- GOVT SECTOR IS MAINLY
CONCENTRATED & CONTRIBUTING ON ACHEVING DEVELOPMENT OF
ECONOMY, HOW TO ESTABLISH MORE NO. OF INDUSTRIES, THEY ONLY THINK
ABOUT IMPROVING ECONOMY AND NOT PROFIT MAXIMAIZATION, to target of
economic development YES TO ACHIEVE THIS OBJECTIVE NEED OF PUBLIC
SRCTOR IS REQUIRED.

DEVELOPMENT OF BASIC AND HEAVY INDUSTRIES- normally these kinds of

industries require huge investments as well as returns takes place so private
investors expect more returns, so because of this private ownership does not
show interest on establishing on these kinda industries, so because of this
reason there is a need of public sector to make investment in these industries.

DEVELOPMENT OF INFRASTRUCTURE- INFRA IN INDIA IS MOSTLY DEVELOPED BY

PUBLIC SECTOR VERY FEW PRIVATE SECTOR IS CONTRIBUTED THIS BECAUSE OF
THERE IS NO MUCH RETURNS OF INVESTMENT IS EXPECTED SO TO DEVELOP INFR
THERE IS A NEED OF PUBLIC SECTOR.
 BALANCE REGIONAL DEVELOPMENT- simultaneous development of all the
regions of the economy, here private sector concentrate only where there is
high returns and invest there, but public sectors makes sure that all the regions
are developed simultaneously.

To reduce sharp disparities of income and wealth – govt is establishing

industries in backward areas to provide employment opportunities once they
will be getting a job they can earn income through that disparities b/w income
and wealth can be eliminated because of this. So govt must establish more no.
of industries in backward areas so that ppl their get jobs for this public sector is
necessary.

Checking Private Sector Monopolies- if public sector is not establishing

industries defiantly private sector will establish and become monopoly in the
market, and survival of public sector will become difficult so for this reason
public sector is required.

Instrument of Achieving Objectives of Economic Planning - targets fixed by

govt in 5 years plan public sector is the working instrument to achieve these
objectives like establishing industries so because of all these reasons there is a
need of public sector.

Achievements of Public Sector in India- Public sector enterprises play a

dominant and dynamic role in the development of Indian economy. The major
contributions are

1. Strong Industrial Base 2.Share in National Income 3.Commanding Heights

of Economy 4.Development of Infrastructure 5. Removal of Regional disparities

6. Public Sector and Capital Formation 7.Earning of Foreign Exchange

8. Saving of Foreign Exchange 9.Share in Employment 10.Contribution to Central

Exchequer
PROBLEMS OF PUBLIC SECTOR - Despite the expansion of the public sector and
the important role they have played in the Indian economy through their
responsibly good performance there has been a lot of criticism about the
performance of public sector enterprise in certain respects.

Public sector enterprises are facing a number of problems due to which their
performance has been much below expectations. Following are the main
problems faced by the public sector enterprises

1. Low profit

2. Under-utilization of capacity

3. Location factor

4. Unprofitable price

5. In adequate autonomy

6. Over staffing

7. Management Gap

8. Inefficient Management

9. Burden of sick units

10. Bureaucratic Culture

11. Poor Project Planning and Control

12. over capitalization

13. Pessimistic Atmosphere