Which of the following is NOT a reason for the government to spend on the Public Sector?

The correct option is To maximize profits for the state treasury.. Explanation In a mixed economy, the Public Sector is established primarily to promote social welfare, ensure equitable economic growth, and provide public goods. Unlike the private sector, which operates on the motive of profit maximization, government spending is driven by socio-economic obligations and the need to address market failures. Statement-wise Analysis: - To provide facilities that the private sector cannot provide at a reasonable cost. is a valid reason: The private sector often avoids projects with high capital requirements, long gestation periods, or low immediate returns (e.g., heavy infrastructure, power generation). The government spends on the Public Sector to provide these essential facilities that are critical for the economy but not commercially attractive initially. - To ensure balanced regional development. is a valid reason: Private investment tends to concentrate in developed regions to maximize returns. The government establishes Public Sector Undertakings (PSUs) in backward and remote areas to ensure balanced regional development and generate employment. - To maximize profits for the state treasury. is the correct answer (Invalid Reason): Profit maximization is the primary objective of the private sector. While modern PSUs aim for financial viability and efficiency, their core mandate is public service and development. Maximizing profits for the state treasury is not the primary rationale for government spending on the public sector. - To support farmers and consumers through fair price mechanisms. is a valid reason: The government intervenes to protect vulnerable sections, such as supporting farmers through fair prices (e.g., Minimum Support Price) and consumers through subsidized goods. The private sector, driven by market forces, does not prioritize such social security mechanisms. Key Takeaway: Public sector expenditure is driven by social welfare, infrastructure development, and regional equity. Profit maximization is the distinguishing motive of the private sector.

Which of the following is NOT a reason for the gov... - NCERT Class 10 Economics MCQ

Solution

The correct option is To maximize profits for the state treasury..

Explanation

In a mixed economy, the Public Sector is established primarily to promote social welfare, ensure equitable economic growth, and provide public goods. Unlike the private sector, which operates on the motive of profit maximization, government spending is driven by socio-economic obligations and the need to address market failures.

Statement-wise Analysis:

To provide facilities that the private sector cannot provide at a reasonable cost. is a valid reason: The private sector often avoids projects with high capital requirements, long gestation periods, or low immediate returns (e.g., heavy infrastructure, power generation). The government spends on the Public Sector to provide these essential facilities that are critical for the economy but not commercially attractive initially.
To ensure balanced regional development. is a valid reason: Private investment tends to concentrate in developed regions to maximize returns. The government establishes Public Sector Undertakings (PSUs) in backward and remote areas to ensure balanced regional development and generate employment.
To maximize profits for the state treasury. is the correct answer (Invalid Reason): Profit maximization is the primary objective of the private sector. While modern PSUs aim for financial viability and efficiency, their core mandate is public service and development. Maximizing profits for the state treasury is not the primary rationale for government spending on the public sector.
To support farmers and consumers through fair price mechanisms. is a valid reason: The government intervenes to protect vulnerable sections, such as supporting farmers through fair prices (e.g., Minimum Support Price) and consumers through subsidized goods. The private sector, driven by market forces, does not prioritize such social security mechanisms.

Key Takeaway:
Public sector expenditure is driven by social welfare, infrastructure development, and regional equity. Profit maximization is the distinguishing motive of the private sector.

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

Options

Did you get this right?

Solution

Explanation

Your note

More from Chapter 2: Sectors of the Indian Economy

Keep practising Chapter 2: Sectors of the Indian Economy