question_answer

Can the public sector companies compete with the private sector in terms of profits and efficiency? Give reasons for your answer.

Answer:

Ans.     It is difficult for a public sector undertaking to compete with a private sector undertaking in terms of profits due to the following reasons:

(a) Motive of public sector is not for earning profit: Public sector works not for profit but for maximum social welfare. It gives first priority to social welfare then it is almost impossible for it to compete with private sector enterprise on the basis of profit which mainly works for profit only.

(b) Public sector takes care of strategic industries: Public sector invests in strategic areas even when these industries have low return generating capacity and long gestation period. These industries do not give monetary returns but if we consider their return in development of our economy otherwise their return is really high.

(c) Public sector provides many facilities free of cost to the weaker section of society: We can't expect a government hospital or a government school to generate profits. Many public sector undertakings provide many facilities for free or at a very low cost due to the benefits that it gives to other sectors of the society. It is difficult for a public sector undertaking to compete with a private sector undertaking in terms of efficiency due to the following reasons:

(a) Dependence on authorities for taking minor decisions: Public Sector undertakings follow a protocol for everything. It leads to delay in decision making and inefficiency in operations.

(b) Job security: Workers of Public Sector enjoy job security. It reduces their performance as they know that in spite of bad performance there is no fear of losing job.

(c) Red tapism and bureaucracy: In public sector undertakings there is red tapism and bureaucracy. It leads to inefficiency in operations.