Public

Public sector
sector
Concept of Public sector
• The industry management and owned by
state govt or central govt.
• The objective of setting up of industries in
public sector i.e. to serve the society
besides earning profit.
profit
• In this all decisions are taken in general
interest of public industry like defence,
railway, post and telegram labour welfare,
atomic energy are some examples of public
sector.
• Public enterprises are controlled &
operated by the government either
solely or in association with private
enterprises.
• To produce supply goods & services
required by the society
• Ultimate control of public
enterprises remains with the state
and the state runs it with a service
motto.
• It will includes all units, irrespective
of risks involved and profit expected
• There is no lack in capital in public
sector and business expansion is not
difficult
• Public sector prevents concentration
& unbalanced growth of industry.
• All activities are accountable to
their respective govt. or national
parliament.

• A public enterprise is seldom as

efficient as private enterprise,
wastage and inefficiency can seldom
reduce a minimum
• The Hindustan ship yard, the
Hindustan steels, Hindustan Machine
tools ,Bharat Heavy Electricals
Indian Telephone Industries; Indian
airlines, Life Insurance Corporation
of India etc are few examples of
Public Sector.
 Types of Corporations

1) Government departments:
These enterprise are financial organized
and controlled by the government like
any other government department under
concern ministry .
e.g.-Railways, defense, post and telegraph
dooradarshan etc.
 2) Public Corporations:
• It is established by special act of parliament
with internal autonomy.

• Its 100% capital is subscribed by the state

and it is owned by state.

• However minister and civil servants do not

interfere in its day to day work.
• The BOD controls day to day affairs and
the requirements & the organization of the
corporations, but final control remains
with the govt.

• E.g.: LIC of India, state power

corporations, Indian airlines, State Road
transport corporations etc
 3) Government companies.
• According to company Act the Government
company is one in which the state, central
or both govt held at least 51% of share
capital to the company .

• Eg. BHEL, Hindustan Steel Etc.

 Features of public sectors:
• Social ownership:
• Motive: to provide economic equality
to all.
• Accountability to parliament
• Power to make decisions: here
decision are made with aim of social
justice and equality to public.
 Advantages of public sector:
• Huge amount of capital
• Availability of resources
• Reduces inequality of income
• Cheaper products bcz of absence of
profit motive
• Welfare of community
• Capital, raw material ,power and
transport are easily available.
 Demerits of public sector:
• Delay in decisions
• No incentives
• Flexible price
• Lack of responsibility
• Misuse of finance
• Political interference