Consider the following statements regarding the role of Government in the Public Sector: 1. The primary purpose of the public sector is public welfare. 2. Governments rely solely on donations to meet expenses. 3. There are some activities that the private sector will not provide at a reasonable cost, necessitating government intervention. Which of the statements given above is/are correct?

Correct Option The correct option is 1 and 3 only. Explanation In a mixed economy, economic activities are divided between the public sector (government-owned) and the private sector (privately owned). The fundamental distinction lies in their objectives: the public sector focuses on social welfare and the provision of public goods, while the private sector is primarily driven by profit maximization. Statement-wise Analysis: - Statement 1 is Correct: The primary objective of the public sector is to ensure social welfare and equitable distribution of resources. Unlike private enterprises that operate for profit, public sector entities often undertake projects that benefit society as a whole, even if they are not immediately profitable. - Statement 2 is Incorrect: Governments do not rely solely on donations. The primary sources of government revenue are taxes (direct and indirect), non-tax revenues (fees, fines, dividends from PSUs), and borrowings. While governments may accept donations (e.g., relief funds), they constitute a negligible portion of the total budget. - Statement 3 is Correct: There are certain essential services and goods (often termed public goods or merit goods), such as sanitation, roads, bridges, and railways, which require massive capital investment and have long gestation periods. The private sector may not provide these goods at a reasonable cost due to the lack of immediate profit or the inability to charge users effectively (non-excludability). Therefore, government intervention is necessary to ensure their availability to all citizens. Key Takeaway: The public sector exists to provide public goods and ensure social welfare, filling the gaps left by the profit-motivated private sector. Government expenditure is funded primarily through taxation and borrowing, not donations.

NCERT Class 10 Economics — Chapter 2: Sectors of the Indian Economy

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Consider the following statements regarding the role of Government in the Public Sector:

The primary purpose of the public sector is public welfare.
Governments rely solely on donations to meet expenses.
There are some activities that the private sector will not provide at a reasonable cost, necessitating government intervention.

Which of the statements given above is/are correct?

Official previous-year question

Verified 1 Aug 2026.

Options

A2 only
B1, 2 and 3
C1 and 2 only
D1 and 3 only

Did you get this right?

Solution

Correct Option

The correct option is 1 and 3 only.

Explanation

In a mixed economy, economic activities are divided between the public sector (government-owned) and the private sector (privately owned). The fundamental distinction lies in their objectives: the public sector focuses on social welfare and the provision of public goods, while the private sector is primarily driven by profit maximization.

Statement-wise Analysis:

Statement 1 is Correct: The primary objective of the public sector is to ensure social welfare and equitable distribution of resources. Unlike private enterprises that operate for profit, public sector entities often undertake projects that benefit society as a whole, even if they are not immediately profitable.
Statement 2 is Incorrect: Governments do not rely solely on donations. The primary sources of government revenue are taxes (direct and indirect), non-tax revenues (fees, fines, dividends from PSUs), and borrowings. While governments may accept donations (e.g., relief funds), they constitute a negligible portion of the total budget.
Statement 3 is Correct: There are certain essential services and goods (often termed public goods or merit goods), such as sanitation, roads, bridges, and railways, which require massive capital investment and have long gestation periods. The private sector may not provide these goods at a reasonable cost due to the lack of immediate profit or the inability to charge users effectively (non-excludability). Therefore, government intervention is necessary to ensure their availability to all citizens.

Key Takeaway:
The public sector exists to provide public goods and ensure social welfare, filling the gaps left by the profit-motivated private sector. Government expenditure is funded primarily through taxation and borrowing, not donations.

Your note

More from Chapter 2: Sectors of the Indian Economy

Consider the following statements regarding the "Service Sector" growth: 1. New services based on information and communication technology have become important. 2. The entire service sector is growing rapidly, providing high incomes to all workers. 3. All workers in the service sector earn high incomes and enjoy job security. Which of the statements given above is/are correct?

medium

Consider the following statements regarding the "GDP" of India: 1. It shows how big the economy is. 2. It is the sum of the value of intermediate goods produced in the three sectors. 3. It excludes the value of goods and services produced by Indians outside the country. Which of the statements given above is/are correct?

medium

Consider the following statements regarding "Disguised Unemployment": 1. It happens when people are visibly unemployed. 2. It is common in the agricultural sector. 3. Removing a few workers from the sector does not affect total production. Which of the statements given above is/are correct?

medium

Consider the following statements regarding the "Unorganised Sector" workers in urban areas: 1. Workers in small-scale industry are always covered under the organised sector. 2. They include casual workers in construction, trade, and transport. 3. Street vendors are considered part of the formal service sector. Which of the statements given above is/are correct?

easy

Consider the following statements regarding the "Primary Sector": 1. It forms the base for all other products. 2. It is unrelated to agriculture and allied activities. 3. It includes activities like mining and forestry. Which of the statements given above is/are correct?

easy

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Correct Option

The correct option is 1 and 3 only.

Explanation

Statement-wise Analysis:

Statement 1 is Correct: The primary objective of the public sector is to ensure social welfare and equitable distribution of resources. Unlike private enterprises that operate for profit, public sector entities often undertake projects that benefit society as a whole, even if they are not immediately profitable.
Statement 2 is Incorrect: Governments do not rely solely on donations. The primary sources of government revenue are taxes (direct and indirect), non-tax revenues (fees, fines, dividends from PSUs), and borrowings. While governments may accept donations (e.g., relief funds), they constitute a negligible portion of the total budget.
Statement 3 is Correct: There are certain essential services and goods (often termed public goods or merit goods), such as sanitation, roads, bridges, and railways, which require massive capital investment and have long gestation periods. The private sector may not provide these goods at a reasonable cost due to the lack of immediate profit or the inability to charge users effectively (non-excludability). Therefore, government intervention is necessary to ensure their availability to all citizens.