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Role of Government in Public Sector

 

Why the govt is needed to spend on public sector:

1. Welfare of the people:

            The modern state is a welfare state that looks after the interests of its citizens. The govt is elected by the people. Its responsibility to the in a democracy. People pay different types of taxes and expect their representatives or the govt to follow policies for the welfare of the people. So generally those activities which do not generate profit and are not taken up by the private sector are taken by the govt or public sector. The govt collects taxes and can raises money to implement various projects or to provide useful services to the people. Thus services like Railways or Post and telegraph are run by the govt for the welfare of the people. Such activities are also beyond the capacity of the private sector.   

2. Large expenditure:

 Some activities like construction of roads, laying down of the networks of railways, Bridges etc need large sum of expenditure that cannot be borne by the private sector. So the govt takes up such activities in the interests of the people in a democracy

3.Some activities that need support of the govt:

There are some activities that need support of the govt in the form of subsidy such as provision of food grains for the poor through ration shops. The govt buys (MSP- minimum support price) wheat, paddy etc at a higher price but sells at a lower price at ration shops (Issue Price) Such activities cannot be taken without the support from the govt. Similarly the govt bears the cost of providing cheap electricity to small scale industries as otherwise they may not be able to afford it and may shut down

4. Duty of the govt:

It is the duty of the govt to raise the standard of living of the people. It should make arrangements for quality education and health services in order to take care of the poorest and most ignored regions of the country through increase in expenditure in such areas. Thus, the govt takes up various activities and spends a lot of expenditure on them

 

 

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