Correct Option
The correct option is 1 only
Explanation
In a mixed and developing economy like India, the State (Government) acts as a crucial economic agent. Unlike private enterprises driven by profit motives, the State functions as a welfare state. Its primary objectives include social welfare, economic stability, and the provision of public goods that the market mechanism fails to provide efficiently.
Statement-wise Analysis
- Statement 1 is Correct: One of the primary roles of the State in a developing country is to foster economic development and social justice. This involves formulating policies and allocating resources to generate employment and ensure universal access to merit goods like education and healthcare.
- Statement 2 is Incorrect: Maximizing profit is the primary objective of private sector enterprises. While Public Sector Enterprises (PSEs) aim for efficiency, their guiding principle is social welfare and service delivery, not solely profit maximization. The State often operates in sectors with low profitability but high social utility (e.g., railways, postal services).
- Statement 3 is Incorrect: Defence, law and order, and general administration are classic examples of public goods (non-rivalrous and non-excludable). Private markets generally do not supply these goods because they cannot easily charge users. Therefore, the State must incur expenditure on these services to ensure national security and governance.
Key Takeaway
Key Takeaway: The State in a developing economy prioritizes social welfare and the provision of public goods (like defence and administration) and merit goods (like education), whereas profit maximization is the characteristic goal of private economic agents.