B.Com Ist Year Industrial Growth In India Short Question Answer Study Notes

B.Com Ist Year Industrial Growth In India Short Question Answer Study Notes :-hii friends this post is very useful for all the student B.com, In this post you will find Business Environment Topic Wise chapter wise all the content Question Answer Notes Model Paper Examination Paper Sample Practice Paper PDF Download Hindi & English For Free.

               Short Answer Questions      

Q.1. What do you understand by public enterprises. Discuss the role of public sector in Indian Economy.

(Meerut, 2014)

Ans. Meaning and Definition of Public Enterprises : l’ublic enterprises means any industrial, commercial or trade organization which is owned, controlled and managed by the Central, State or Local Government. According to T. R. Sharma, “Nationalized or state undertakings are those which are wholly or for the greater part owned by the state or where the state lays down the objectives and controls their working.”

The main objective of public enterprise is to watch public interest, economic equality, social justice and rapid economie development of the country. Public money is invested in public enterprises, therefore they are accountable to the public through parliament.


The following arguments can be given in favour of public sector in India:

(1) Establishment of Key and Basic Industries: There are some industries which have to be developed so that other industries may be developed later. These industries are known as key and basic industries. The setting of these industries is essential such as iron and steel industry without which other industries cannot develop. Such industries require huge amount of capital at the same time but the profit margin of such industries may be low. Naturally. in a planned economy, these undertakings have to be started by the government.

(2) Development of Infrastructure : Without an adequate development of transportation and communication facilities, fuel and energy, and basic and heavy industries. the process of industrialization cannot be sustained. The private sector never shows any inclination to develop the infrastructure. The private sector has comparatively weak both financially and technically. Thus, the public sector has enabled the economy to develop a strong infrastructure for the future economic growth.

(3) Balanced Regional Development : Private sector take interest in such industries and regions where they can earn more profit in short run. Due to this some regions and industries get developed while some other have been neglected. In order to balance the industrial development, it is essential to set up public enterprises in backward areas.

(4) Checking Concentration of Income and Wealth: With the establishment of public enterprises, concentration of economic power in a few hands can be checked easily. It helps to check the economic disparities, injustice and exploitation. Profits of public enterprises can be utilised for promoting general social welfare.

(5) For Rapid Economic Development: Public sector is also essential to boost up the rate of economic growth. The object of

economic planning and rapid economic development cannot be achieved by private sector only.

(6) Huge Capital Investment Industries: There are certain industries which require large initial investment of capital. In these industries the rate of profit is very low or profit may arise but only after a long time. Private industrialists are reluctant to come forward and undertake such enterprises. The government has, therefore, to take the initiative and establish these industry for the growth of the economy.

(7) Increase in Employment Opportunities: Public sector has also provides the employment opportunities on a very wide scale to the public. They have acted as a model employer by providing better wages and other facilities to their workers as compared to private sector.

(8) For Technological Development: Private sector never take interest in research and development due to cast factor. Only public sector can spend huge amount on technical development, research and innovations. Therefore, for the technical development of the country it is essential to set up public sector units.

(9) For Social Welfare: Public utility services like education, health, medical facility, roads, electricity etc. are provided by public sector only. The private sector cannot put his money in such projects where no money return can be expected. It is only the public sector which provide cheaper and better public utility services.

Q.2. Discuss the major problems and demerits of publie sector.

Ans. The major problems and demerits of public sector are as follows:

(1) Lack of Efficiency : Public enterprises are not run on commercial principles. Indiscipline and lack of responsibility among the workers and frequent labour unrest affects the efficiency of public enterprises adversaly.

(2) Inefficient Management: Public enterprises are managed by public servants who are generally not professionally qualified. Executive centralisation and ministerial interference have played havoc with the efficient working of public undertakings.

(3) Delay in Decisions : Delayed in decision making is one of the major problem of public enterprises, Due to delay in decisions public enterprises have been emerging losses and the amount of lossess are mounting year after year.

(4) Lack of Motivation: In the public enterprises, employees get fixed salaries and other perks. The workers has no reward for good work and no punishment for bad. Due to lack of motivation efficiency of the workers affected badly.

(5) Problem of Price Policy : Government undertakings should not bother about getting profits, they should give greater importance to provision of welfare to the community. Public sector enterprises in India have failed because their pricing policies are not rational

(6) Heavy Overhead Expenditure : It has been observed that, public sector enterprises tend to spend rather heavily on unnecessary and minor items.”

(7) Problems of Labour: Public sector enterprises are often plagued with undue political interference in their day-to-day working and this has demoralising effect on the management and other personnel of these enterprises. In many public enterprises serious labour troubles have occurred continously.

(8) Problem of Over-Capitalisation : Amount of capital invested per unit of value-added is relatively higher in public sector enterprises. This type of over-capitalisation can be traced to avoid expenditure during construction work, surplus machine capacity, tied aid resulting in compulsion to purchase imported machinery and equipment, expensive turn-key contracts, etc.

Q.3. What is meant by Private Sector ? Discuss the role of private sector in the industrial growth of India.

Ans. Meaning of Private Sector:Private sector refers to that sector of the economy which is owned and controlled by the private hands. All the factors of the production owned by the private sector are used to maximise their profit and for personal initiative. But in these days the private sector is qualitatively different from the private sector of the past as now these are owned by the shareholders and managed by the professional managers.


The role of private sector in Indian Economy can be summarised as follows:

(1) Contribution to National Income: The private sector is the dominant sector as larger share of India’s national income gets originated through this sector. Private sector has a great contribution in the gross domestic production of the country. It is contributing almost 75% of the GDP.

(2) Contribution to Capital Formation : By making substantial contribution to capital formation, the private sector is

assisting the growth of Indian Economy. In 1991-92 the share of private sector in capital formation was 61.2% which has increased to 70.72% in 1997-98 and 69.03% in 2000-01.

(3) Motivation for Savings : Private sector encourages the desire and capacity of savings in the people. In 1990-91, the private savings was Rs. 1,25,061 crore which has become Rs. 20,67,474 crore in the year 2009-10.

(4) Contribution to Employment : The private sector generates substantial employment in Indian Economy. In 2001, 277.90 lakh persons were employed in organised sector. Out of these 86.52% were employed in private sector. This indicate the growing role of private sector in employment generation.

(5) Contribution in the Development of Modern Industries: Private sector also plays a vital role in the development of modern industries. Important consumer goods industries such as cotton textile, sugar, paper, etc. were set up in private sector. Many intermediate goods producing industries and machine producing industries have also been set up in the private sector.

(6) Role in Small Scale Industries : Private sector also contributes in the development of small scale industries. With the help of small capital, the small entrepreneur uses his resources efficiently to earn maximum profit.

(7) Contribution to Export Earnings : The role of private sector in India’s export trade is much more impressive than that of the public sector. The export earnings of the private sector was about 63% of the aggregrate export earning of the country.

Q.4. Discuss the Limitations of Private Sector.


Discuss the demerits of Private Sector.

Ans. Although the private sector has played a vital role in Indian industrial progress, but it exhibit certain weakness and limitation also. Main demerits of private sector are as follows:

(1) Lack of Social Obligation: The private sector enterprises generally do not discharge their obligations to the society. Tactics of black marketing, hoarding, adulteration etc. are followed to earn more profits by this sector. Private enterprises charge high prices of goods which affect the society adversely.

(2) Emergence of Black Money: Private sector is responsible mainly for emerging the black money in the economy. It follows improper business practices and earn huge protits, but do not pay

proper tax to the government. By means of tax evasion and illegitimate transactions, it provide black money in the economy.

(3) Concentration of Economic Power: The private sector in India has a tendency to degenerate into monopoly capitalism. This situation concentrate the economic power in hands of some business and industrial houses. Through the use of unfair and restrictive trade practices, they had succeeded in eliminating their rivals and acquired phenomenal wealth and economic power.

(4) Priority to the Production of Non-essential Goods : Private sector produce only that goods which give them profit at a higher rate. To earn huge profit, private sector give more emphasis to the production of luxurious goods instead of essential goods. The private sector’s contribution to the generation of output in heavy and basic industries has almost been nil.

(5) Industrial Sickness : The growing industrial sickness is one of the weakness of India’s private sector. Substantial amount of loanable funds of the financial institutions are locked up in these units. It cause wastage of resources and affects the growth of the industrial economy adversely.

(6) Industrial Disputes : The private sector enterprises suffer from more industrial disputes as compared to the public sector enterprises. Industrial dispute arises due to non-fulfilment of worker’s demand for higher wages and bonus and improvement in employment conditions. The country has suffered heavily in terms of loss of production on account of industrial disputes. ..

(7) Imbalance Regional Development: Private sector leads to the imbalance regional development. Private enterpreneurs establish their industries in well developed areas where facilities of electricity, transportation, water and telecommunication etc. are available easily. Due to this those regions will remain backward where sufficient infrastructural facilities are not developed.

Q.5. Distinguish between public sector and private sector enterprises.



Basis of Difference Public Sector Private Sector
Ownership and Management The public enterprises are owned and managed by the government. The private enterprises are owned by individuals.
Objects The main object of public enterprises is social service and welfare. Profit earning is main object of the private enterprises.
Investment Huge investment are made by the government. Investment in private sector are made bu some specific individuals.
Naature of Industry Public enterprises are involved in the establishment of basic and heavy industries. Private enterprises are involved. In setup of consumer oriented industries.
Contribution in Economy Public enterprises play a vital role in the development of economy. Contribution of private enterprises in the economy is relatively less as is relatively less as is relatively less as compared to public enterprises.
Perfor mance measures Main performance measures are quality and sufficiency of production, reduction in cost and social welfare. Main performance measures are amount of profit and return on investment.

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