INTRODUCTION

The part of the economy concerned with providing basic government services. The composition of the public sector varies by country, but in most countries the public sector includes such services as the police, military, public roads, public transit, primary education and healthcare for the poor. The public sector might provide services that non-payer cannot be excluded from (such as street lighting), services which benefit all of society rather than just the individual who uses the service(such as public education), and services that encourage equal opportunity.

OBJECTIVES OF PUBLIC SECTOR

To accelerate the industrial growth and development of the economy. To build up a strong infrastructure for supporting economic growth and development of the country. To provide competition to the private sector for welfare of the state and the public at large. To generate employment and strive for removal of poverty. To make investment in order to fill the gap between savings and investment. To promote balanced and comprehensive economic growth of the country.

OBJECTIVES OF PUBLIC SECTOR

To redistribute income and wealth in order to remove inequalities in society. To make investment in those areas where the private sector is not willing to invest. To promote the development of small and ancillary industries. To focus on increasing exports of the country for earning foreign exchange and also to enter sectors where 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.

PERCENTAGE SHARE OF PUBLIC AND PRIVATE SECTOR IN CAPITAL FORMATION

Plan
First Plan
Second Plan

Public Sector (in per cent)

46
54

Private Sector (in per cent)

54
46

Third Plan
Fourth Plan Fifth Plan Sixth Plan Seventh Plan Eighth Plan Ninth Plan Tenth Plan Eleventh (2007-12)

63
61 58 53 48 45 33 24 22

37
39 42 47 52 55 67 76 78

SIGNIFICANCE OF PUBLIC SECTOR

Employment

Generation Capital Formation Share in GDP Infrastructure development Strong industrial base Export promotion Import substitution Removal of regional disparities Raising internal resources Growth of ancillary industries Social welfare Competition to private sector

PROBLEMS IN PUBIC SECTOR

Social

welfare rather than profit maximization Lack of good management Lack of autonomy to make decisions regarding their own growth and development Over-staffing and inefficiency of employees Under-utilization of production capacity Industrial disputes Wrong pricing policies

PROBLEMS IN PUBIC SECTOR

Political

interference and corruption Obsolete technology Over-capitalization

SUGGESTIONS FOR THE IMPROVEMENT OF PUBLIC SECTOR

Suitable

reforms in the board of directors. Politicians should not be appointed as directors of these boards. Control over political interference Appointment and selection of efficient employees Granting autonomy Regular inspection and auditing Reforms in labour policy

SUGGESTIONS FOR THE IMPROVEMENT OF PUBLIC SECTOR

Increase

in efficiency Reforming pricing policies Voluntary retirement Scheme Use of sophisticated technology Revival of PSUs Memorandum of understanding (MOU)

CONCLUSION
The disinvestment programme has been carried out by the government in a hasty manner. The outcome of privatization so far as has been pathetic. The stress should be on making PSUs work more efficiently rather than reducing public ownership in the economy.