Sectors of the Indian Economy
Public and private sectors
Distinguish public from private sectors and explain why government spends.
Who owns it? Another way to sort activities is by who owns the assets and who provides the services.
- Public sector: most assets belong to the government, which also runs the services. Examples: railways, the post office.
- Private sector: private individuals or companies own the assets and provide the services. Examples: Tata Iron and Steel Company (TISCO), Reliance Industries (RIL).
Profit or public service? The private sector is guided by the motive to earn profit; to get its services, we pay it. The public sector's aim is not just profit: governments pay for their services with taxes and other income.
Things only the government will do. Some things that everyone needs would not be offered by private firms at a fair cost:
- they need huge sums of money, beyond private companies;
- collecting money from thousands of users is hard;
- even if they did it, they would charge high rates.
Examples: roads, bridges, railways, harbours, generating electricity, and irrigation through dams. So the government spends on these and makes them available to everyone.
Activities the government supports.
- Electricity: if electricity were sold at its full cost, many small industries might have to shut down. So the government supplies it at rates they can afford, and bears part of the cost.
- Food: the government buys rice and wheat from farmers at a 'fair price', stores them in godowns, and sells them cheaper to consumers through ration shops. This way it supports both farmers and consumers.
The government's own duties. Some things are the primary responsibility of the government:
- health and education for all: running good schools, especially for elementary education. few countries have as many people who cannot read as India;
- nutrition and health: close to half of Indian children are malnourished, and a quarter are critically ill. Infant mortality in Odisha (36) and Madhya Pradesh (43) is worse than in some of the world's poorest places;
- safe drinking water, housing for the poor, food and nutrition, and the needs of the poorest regions of the country.
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