Public enterprises are playing an important role in the economic development of developing countries. They are involved in various sectors of economy. They play an active role in fulfilling the needs of people.
The importance of public enterprises is become clear from the following points
The importance of public enterprises is become clear from the following points
1. Planned Development
Most developing countries have five years development plans for economic development. Public enterprises are given specific roles and targets in such plans. Public sector programs are also implemented by public enterprises. They are important for planned development of the country.
2. Infrastructure Development
Infrastructure consists of transport, communication, power, irrigation, drinking water and buildings. They require huge investment and long period is required to complete them. Private sector is not interested in such investment. Public enterprises are important to build infrastructure in the country.
3. Basic and heavy industries development
Iron and steel, electricity, cement, fertilizer, petroleum and telecommunication are examples of basic and heavy industries. They are essential for industrialization of the country. Private sector lacks resources and interest to invest in such industries. Public enterprises are important for the establishment of basic and heavy industries. Defense production is generally done by public enterprises.
4. Public utilities concerns
Public utilities consists of services. They can be water supply, electricity, oil and gas, railways, airlines, public transport and telecommunications. They are essential for public welfare. Government has responsibility to provide such services at reasonable price. Public enterprises are important to provide public utility services at low cost.
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5. Balanced development
Government requires balanced development in all regions of the country. Private sector is not attracted to less developed regions because of low economic gain. Public enterprises are important for industrial development of backward regions.
6. Employment creation
Government has responsibility to create employment opportunities in the country. Private sector is not interested to create employment at the cost of profit. Public enterprises are important to generate employment opportunities in the country. Their size is big and employee need is also big. They safeguard interests of employees.
7. Government revenue
Public enterprises are important source of government revenue. They pay various types of taxes, such as customs duties, value added tax, excise duty, income tax and others. Such taxes are important in government revenue. Profit generated by public enterprises can be used to fund development programs.
8. Economic growth
Public enterprises are the drivers of economic growth in the country. They develop infrastructure facilities and operate public utilities. They use modern technology for production purposes. All these aspects help in acceleration of economic growth in the country.
9. Social welfare
Public enterprises provide essential goods and services at reasonable price. They also supply essential commodities such as fertilizer and food grains at subsidized price. They check price rise of essential goods by regular supply. This promotes social welfare in the country.
