Another way of classifying economic activities into sectors could be on the basis of who owns assets and is responsible for the delivery of services. The public sector, the government owns most of the assets and provides all the services. In the private sector, ownership of assets and delivery of the services is in the hands of the private individuals or companies. Railways or post office is an example of the public sector whereas companies like iron and steel company limited and other big industries limited are privately owned.
Activities in the private sector are guided by the motive to earn profits. To get such services we have to pay money to these individuals and companies. The purpose of the public sector is not just to earn profits. Governments raise money through taxes and other ways to meet expenses on the services rendered by it. Modern day governments spend on a whole range of activities. What are these activities? Why do governments spend on such activities?
There are several things needed by the society as a whole but which the private sector will not provide at reasonable cost. Why? Some of these need spending large sums of money, which is beyond the capacity of the private sector. Also, collecting money from thousands of people, it is not easy to who use of these facilities. Even if they do provide these things they would change a high rate for their use. Roads, bridges, railways, harbors generating electricity, providing irrigation through dams are main construction.
Thus, governments have to undertake such heavy spending and ensure that these spending and ensure that these facilities are available for every one.
These are some activities, which the government has top support. The private sector may not continue their production or business unless government encourages it. Selling electricity at the cost of generation may push up the costs of production of industries. Many units, especially small-scale units, might have to shut down. Government here steps in by producing and supplying electricity at rates which these industries can afford. Government has to bear part of the cost.
Similarly, the government in India buys wheat and rice from farmers at a `fair price’. This it stores in its storerooms and sells at a lower price to consumers through ration shops. The government has to bear some of the cost. In this way, the government supports both farmers and consumers.
There are a large number of activities which are the primary responsibility of the government. The government must spend on these. Health and education facilities are providing for all.
Running proper schools and providing quality education, particularly elementary education, is the duty of the government.
*Government also to pay attention to aspects of human development such as availability of safe drinking water, housing accommodation for the poor and food and nutrition.
*It is also the duty of the government to take care of the poorest and most ignored regions of the country through increased spending in such areas.