Methodology of Business Studies - Section 2, Part 3

Part III – Public Sector – Private Sector -Cooperative Sector
 and Non Profit Enterprises
Public Sector
A public sector enterprise is one that is owned, managed and controlled by the Central Government or any State Government or local authority. There are about 1000 PSEs, of which about 800 are owned by the States. The major part of public investment by the central government has been made in infrastructure such as power, coal, petroleum, steel, fertilizers, etc and a low percentage of investment has been made in textiles and consumer goods.
    The major contributions of Public Sector to Indian economy are in the forms of :-           (Goals of PSUs)
(1)Development orientation through mobilizing and utilizing saving and further capital formation.
(2)Generation of more employment opportunities.
(3)Contributes to the net domestic product through generation of internal resources, payment of dividend and through contribution to government exchequer (taxes and duties).
(4)Contributes towards the development   of infrastructure.
(5)Contributes towards the welfare of weaker sections of economy.
(6)Helps in maintaining process of raw- materials.
(7)Contribute towards promotion of exports and import substitution.
(8)Helps   in preventing imbalance of wealth and promoting equity.
(9)Protects the interest on consumers and
        (10) Stands for the common good of all.
Problems faced by PSus:-
(1)Poor service from employees and their jobs are more secure than those in private sector.
(2)More wastage.
(3)Consumer dissatisfaction due to lack of innovative practices.
(4)Mis investment and mismanagement.
(5)Misallocation of labour and capital.
(6)Political influence and
(7)Lack of proper accountability.
Changing role of PSUs in India:-
    At the time of Independence, PSUs were regarded as important catalysts for social change. They are regarded as the development agents. In the post 1990, the role of PSUs was redefined and made them accountable for losses and returns in investment. The government initiated disinvestment and even privatisation. Disinvestment means the dilation of stake of government is PSU to less than 50% of its total stock, and retains the control and management by govt. If disinvestment exceeds 50%, and the control and mgt. transferred to private – enterprise, it results is privatization. The government for raising resources now utilising this means and there fore the role of PSUs are getting reduced day by day and they need to compete with private sector for growth and survival.
Private Sector
A private sector enterprise is one which is owned, managed and controlled by individuals or group of individuals. In the post liberalisation era, role of private sector turns to be very important. The government has sought to transform itself from being a provider of public services to a purchaser on behalf of users. Why private sector is regarded as an important part of Indian economy, there are several reasons for the same:
(1)    The private sector is the dominant sector of the economy.
(2)    It contributes towards development through research and innovation.
(3)    It creates more and more employment opportunities.
(4)    It contributes to the development through small and micro businesses.
(5)    It improves the standard of living of people through diversification.
(6)    It attracts more foreign exchange.
(7)    It provides fair return to investors.
    The largest private sector company in terms of market capitalization is Reliance industries and the top 3 companies in terms of assets were Reliance Industries, Tata Steel and Hindalco. The top 3 IT Companies of the country are Infosys, TCS and Wipro.
    Market capitalization is simply the value assigned by the stock market to a firm.

Co-operative Sector
Cooperative refers to an institutional frame work to organise self help among members. The major features of it consist of voluntary membership, democratic functionary, social interest promotion etc. The Indian cooperatives are patronised by the state through:

• Participation in share capital.

• Provision of loans to societies.

• Provision of tax concessions.

• Provision of legal concessions.

• Provision of education and training.

• Assistance of RBI.

The important objectives or goals of the cooperative sector are:
(1)Prevention of concentration of economic power.
(2)Wider dispersal of ownership of productive resources.
(3)Active involvement of people in the development programmes.
(4)Augmentation of productive resources.
(5)Prevention of unemployment and poverty.
(6)lower the bureaucratic evils.
(7)Act as instruments for planned growth of the country.

Non- Profit Enterprises
A non- profit organisation is an organisation that does not distribute its surplus funds to owners or shareholders, but instead uses them to pursue its goals. They can be of trusts, societies, section 25 companies and special licensed organisations. The basic objective or goal of NPOs is to obtain a response from a target market. The response could be a change in values, a financial contribution, the donation or services or some other type of exchange. They use advertising, publicity and personnel selling to communicate with clients and the public. Now a days they are raising money by increasing the prices of their services or are starting to change for their service. They also resort to donations, contributions or grants.