Public sector plays a major role in the development of any economy.

It has following importance:

1. Public Sector and Capital Formation: 

• The role of public sector in collecting, saving and investing them during the planning period has been very important.

2. Economic Development:

• Economic development mainly depends upon industrial development.
• Heavy and basic industries like Iron and steel, shipping, mining, etc. are required for supplying raw materials to small industries.

3. Balanced Regional Development:

• Public enterprises have developed the backward areas thereby bringing about complete transformation in the socioeconomic life of the people in these regions.

4. Employment generation:

• Public sector has created millions of jobs to tackle the unemployment problem in the country.
• The number of persons employed during the year 2011 was 150 lake.

5. Export Promotion and Foreign Exchange Earnings:

• Some public enterprises have done much to promote India’s export.
• The State Trading Corporation (STC). The Minerals and Metals Trading Corporation (MMTC) have done very well in export promotion.

6. Protection to Sick Industries:

• Public sector takes over the sick industries and prevent many people from getting unemployed.
• It also prevents unnecessary locking of capital, land, building, machinery,etc.

7. Import Substitution:

• Some public sector enterprises were started specifically to save foreign exchange.
• The ONGC, the Indian Oil Corporation Ltd., the Bharat Electronics Ltd., etc., have saved foreign exchange by way of import substitution.