PUBLIC SECTOR

By : ANIRUDH JAIN X-E ROLLno.7PUBLIC SECTOR1Introduction The part of theeconomyconcerned with providing basic governmentservices. Thecomposition of thepublic sectorvaries bycountry, but in most countries the public sector includes such services as the police, military, public roads, public transit,primaryeducation and healthcare for the poor. The public sector might provide services that non-payer cannot be excluded from (such as street lighting), services whichbenefitall of society rather than just theindividualwhousestheservice(such as public education), and services that encourage equal opportunity.2Objectives of public sectorTo 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.

3To 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.4To help the govt in implementation of economic policies and achieving objectives of five year plans.To eliminate monopolies and prevent monopolistic practices.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 andPrivate Sector in Capital Formation

PlanPublic Sector(in per cent)Private Sector(in per cent)First Plan4654Second Plan5446Third Plan6337Fourth Plan6139Fifth Plan5842Sixth Plan5347Seventh Plan4852Eighth Plan4555Ninth Plan3367Tenth Plan2476Eleventh (2007-12)22786Significance of Public SectorEmployment GenerationCapital FormationShare in GDPInfrastructure developmentStrong industrial baseExport promotionImport substitutionRemoval of regional disparitiesRaising internal resourcesGrowth of ancillary industriesSocial welfareCompetition to private sector

7Problems in Pubic SectorSocial welfare rather than profit maximizationLack of good managementLack of autonomy to make decisions regarding their own growth and developmentOver-staffing and inefficiency of employeesUnder-utilization of production capacityIndustrial disputesWrong pricing policies8Problems in Pubic SectorPolitical interference and corruptionObsolete technologyOver-capitalization9Suggestions 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 interferenceAppointment and selection of efficient employeesGranting autonomyRegular inspection and auditingReforms in labour policy

10Suggestions for the improvement of Public Sector

Increase in efficiencyReforming pricing policiesVoluntary retirement SchemeUse of sophisticated technologyRevival of PSUsMemorandum of understanding (MOU)11Frictional unemploymentStructural unemploymentCyclical or Keynesian unemploymentSeasonal unemploymentTypes of UnemploymentFrictional unemployment

Frictional unemployment occurs when a worker moves from one job to another. It is a result of imperfect information in the labor market, because if job seekers knew that they would be employed for a particular job vacancy, almost no time would be lost in getting a new job, eliminating this form of unemployment.

Structural unemploymentStructural unemployment arises when the qualification of a person is not enough to meet his job responsibilities. Conversely, structural unemployment arises when the salary offered to a person falls short of the minimum wage that can be paid for the concerned job.Cyclical unemployment Cyclical or demand deficient unemployment occurs when the economy is in need of low workforce. The demand for labor increases with the economy in the growth phase. Again, when the economy passes through depression, demand for labor decreases and the extra workers are released as the unemployed labor force. Seasonal unemployment occurs when an occupation is not in demand at certain seasons.Seasonal UnemploymentCauses of unemployment High Population growth.Absence of employment opportunities.Seasonal Employment.Joint Family System.Increasing turnout of students from Indian Universities.Slow Developing of Industries.Insufficient Rate of Economic Progress.

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.29THANK YOU!