Question -
Answer -
Following were the role of public sector before 1991:
1. Developing Heavy Industries and Infrastructure: Theinfrastructure of the country had not developed before 1991. There were lessindustries and also lack of heavy industries. The government in form of publicsector industries took the initiative to start such projects.
2. Maintaining Regional Balance: After setting up planningcommission, the government started concentrating on development of rural andbackward areas and as result four steel plants were setup in rural areas toencourage economic growth of the region and provide employment to thepopulation.
3. Maintaining economies of scale: The cost of production willbe low when it is produced in bulk, but bulk production requires huge amount ofcapital. Electricity, natural gas and petroleum were the industries chosen bygovernment for mass production. it helped balance the economies of scale.
4. Economic Power: After independence few industries existed andstarting a new venture required huge capital, in this stage if public sectorunits were not established, then the wealth would have become concentrated infew hands which would have given rise. The public sector ensured that benefitsshould be enjoyed by a large number of people.
5. Self-Reliance: Heavy machinery was required for a strongindustrial base. The government selected enterprises like STC helped in effortsof expansion and creation of heavy machinery and metal industries domestically.It drastically reduced the imports and created a self-reliance for goods.