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ECONOMIC APPLICATIONS, CLASS - X, CHAPTER - 14 [ Public Sector Enterprises], -----------------------------------------------------------------------------------------1.What are public sector unit? Give two examples of public, sector enterprises., Answer : Public sector enterprises are those enterprises which are, owned and managed by the government., Example : State Bank of India (SBI) ,BHEL (Bharat Heavy, Electricals Limited)., 2.Explain any four ways by which public sector enterprises, face a dominant role in an economy., Answer:, , Role of Public Sector enterprises in an economy., , (i)Development of infrastructure : Development of infrastructure, comprising transport, power, communication, basic industries, etc., is a precondition of growth. Expenditure on the development of, infrastructure is known as Social Overhead Costs. Pace of industrial, development cannot be accelerated without their establishment., Their development requires huge capital investment, which cannot, be mobilised by the private sector. Moreover, these projects do not, promise high profits. The private entrepreneurs would therefore be, reluctant to undertake them., , (ii) Development of backward areas : The goal of achieving a, reduction in economic inequality between regions becomes easy to, reach, if industries are setup in the backward areas. But the profit, seeking private industrialists often are not enthusiastic enough to, set up industry in the backward regions. The government, therefore,

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finds it necessary to start industrial production in these areas on its, own., (iii) Basic facilities: There are a large number of activities which, are the primary responsibilities of the government. The government, must spend on these. Providing health and education facilities for, all is one example. Running proper schools and providing quality, education, particularly elementary education, is the duty of the, government. India’s size of illiterate population is one of the largest, in the world., (iv)Other problems : There are many other problems like, malnourishment, high infant mortality rate, unsafe drinking water,, lack of housing facilities, etc. which need special attention. These, problems can be solved only with the help of the government., 3. Explain any four problems faced by public sector, enterprises., Answer : Problems faced by public sector enterprises, (i) Poor planning: Public sector undertakings are often established, in a hurry without clear cut objectives. There is always lack of, proper evaluation of demand and supply., (ii) Ineffective financial control: Several public sector undertakings, suffer from over capitalization due to insufficient planning. This is, totally wastage of financial resources. Even investment worth, thousands of crores of rupees in the public sector undertakings is, not utilized fully., (iii) Inefficient Management: The management of the public sector, undertakings are inefficient due to centralized decision-making,, frequent transfer of top executives. Some persons are appointed, with the approach of politicians. This results in inefficient

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management. Moreover PSU faces the problem of sick units due to, time and cost over runs., (iv) Wasteful expenditure: Wasteful expenditure is also one of the, problems faced by public enterprises. The Government funds and, property are used carelessly by the Government officials and other, servants leading to an increase in the cost of production.