Page 43 - Understanding Economics for Class 10

Way to tackle it: by creating
more employment opportunities
in various sectors
Organised The way Organized sector offers jobs Workers are exploited in
Goyal Brothers Prakashan
and people that are most sought-after unorganised sector
Unorganised are but are less whereas workers Way to tackle it: providing
employed in unorganized sector are security to the vulnerable
exploited by paying less and people both in rural and
no job security. urban areas.

SectorS in termS of oWnerShiP: PUBLic And PrivAte SectorS

On the basis of who owns assets (ownership) and is responsible for the delivery of services,
another classification of economic activities can be done- Private and Public Sectors.
Public Sector
 The government holds ownership of the majority of assets while also being the sole
provider of all services.
 Example of the public sector are Railways or post office.
 The sole purpose of the public sector is not to earn profits but to provide maximum social
benefits. Government raise money through taxes and other ways to meet expenses on the services
rendered by it. On a whole range of activities, spending is done by modern day governments.
Private Sector
 Under this sector, Ownership of assets and provision of services are vested in the hands
of private individuals or companies.
 Examples of privately owned companies are Tata Iron and Steel Company Limited (TISCO)
or Reliance Industries Limited (RIL).
 Activities in the private sector are guided by the motive to earn profits. To get such
services, a price has to be paid to these individuals and companies.
 Private sector cannot provide everything needed by the society at a reasonable cost.
Reasons are:
 Heavy or large spending of money is required in certain areas, which is beyond the
capacity of the private sector.
 It is not easy to collect money from thousands of people who use these facilities.
 If private sector provides such facilities, they would charge a high rate for their use.
 Examples are construction of roads, bridges, railways, harbours, generating electricity,
providing irrigation through dams etc.
 To ensure that these facilities are available for everyone, governments have to undertake
such heavy spending.
 There are some activities, where the support of the government is required, private
sector may not continue their production or business unless government encourages it.
 For example, selling electricity at the cost of generation may push up the costs of
production of goods in many industries.
 Many units, especially small-scale units, might have to shut down. Government here
steps in, it bears the part of the cost by producing and supplying electricity at rates
which these industries can afford.
 Similarly, the Government in India maintains buffer stock by buying wheat and rice
from farmers at a ‘fair price’ (MSP). It stores in its godowns and sells at a lower
price to consumers through ration shops. The government has to bear some of the

Economics Class X E-37