Rational of Public Enterprises

 Public Enterprises possess an important position in the development of every economy but they possess a very important role in socialist and mixed economy.

The Enterprises that are established owned, controlled by Union Government,or one of the states of Central Government or both these types of Enterprises are called Public Enterprises.

In other words we can say that the Enterprises whose 51 percent share owned by Union Government or State Government or any Territorial Government theese types of Enterprises are called Public Enterprises.

Rational of Public Enterprises-

There are a number of rationals of Public Enterprises.These rationals are as below-

1.To provide basic infrastructure-It is the first rational of Public Enterprises.There are a number of basic infrastructure required to develop economy.These infrastructures are Road,Railway,Electricity, Telecommunication,etc.Public Enterprises are established to provide all these basic infrastructures.

2.To develop core sectors-There are a number of industries that belongs to core sectors and play an important role to develop economy.These sectors are Coal,Iron,Steel etc.All these sectors required heavy investment so private sectors do not interested to invest all these sectors.Public Enterprises are established to operate in these sectors to develop economy.

3.To save people interest- There are a numbers of sectors that possess maximum risk.These sectors are Banking,Insuranance Telecommunication.It is possible Private Enterprises may do feaud to people.Public Enterprises are established to save the interest of people.

4.To stop Monoplolies-We know that the aim of Private Enterprises to earn maximum profit so it is possible that they do non economic activities like Black Marketing,to create artifical scarcity,to increase price etc.The rational of Public Enterprises to stop all these activities.

5.Economic development-It is the main rational of Public Enterprises.It is established to accelerate the rate of economic growth.

6.Self Reliant-Every country wants to become self reliant to provide world class service to its citizens.Public Enterprises are established to become Self Reliant.

7.Balance development-There are many essential element of production.These elements are land,labour,finance,raw material etc.All these elements are not present in every region of country so Private Enterprises do not start their business where all these things are present in less amount.Public Enterprises are established in these region to balance development of nation.

8.Employment generation-Unemployment is one of the biggest problem every government faces every time.There are a number of methods to generate employment.To establish Public Enterprises is one of the popular method that is used by many government in undevelop and developing countries.

9.Capital formation-Public Enterprises perform their function by effective,efficient way and earn maximum profit.They provide their profit to concern government.In this way they play an important role to form capital.

10.Labour welfare-Every government wants to welfare of labours.Public Enterprises provide handsome salary,T.A.,D.A.Housing facalities,Insurance,Pension to their employees so we can say that it is also an important rational of Public enterprises.