(i) Promotion of welfare : In India, ‘socialistic pattern of society’ has been regarded as the national goal. This goal calls for state participation in industrial and commercial enterprises to promote social welfare. In our economy, public sector enterprises are being used as an instrument to promote economic growth with social justice.

(ii) Infrastructure : Without the development of infrastructural facilities (such as transport, communication, power, irrigation, education, basic industries, etc.) economic development is not possible. These infrastructural facilities are developed only by the public sector of the country because private sector does not take interest in their development due to lack of resources and less profitability. Public sector investment in infrastructure has paved the way for agricultural and industrial development.

(iii) Strong Industrial Base : There is no denying the fact that rapid industrialisation during the first three decades after independence was mainly due to the public sector. Thus, by developing a strong industrial base, the public sector has now opened the path of rapid industrialisation of the country.

(iv) Export Promotion and Import Substitution : Public sector enterprises have been contributing a lot for the promotion of India’s exports. This has resulted in foreign exchange earning.