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Friday, 18 March 2011

What do you mean by state ownership? Describe briefly the causes of the growth of state ownership

State Ownership:-
It involves all those business, trade and industrial activities which are carried on under the ownership and management of the government. It is desired by every government for the purpose of safeguarding the public interest. It is regarded most essential to promote the welfare of the country. The state enterprises are conducted by government or semi-government organization and public statutory corporation. All the public utilities programs are particularly served by the state ownership undertaking.

Cause of growth of state and business ownership

The major causes of the growth of state or business ownership are indicated as below:

1. Heavy expenditure:-
Many investors hesitate to invest their capital where heavy expenditure is required but return is not so in near future. On the other side government spend large sum of money on such projects without any motive of profit.

2. Public utilities services:-
Government contract over some enterprises with a view to providing utilities services to the public. All corporations, municipalities and district councils are supervised by the government which render valuable services in providing public amenities.

3. National interest:-
State intervention is also required for national interest. It is always considered most essential to protect defense and other key industries in every case.

4. Establishment of monopoly:-
Government undertakes some enterprises to hold strict control over them railway electric and water supply, communication are directly managed by the government for the public interest.

5. Promotion of welfare:-
This is major motive behind the growth of state ownership that govt. wants to achieve rapid economic development in order to promote welfare of the public.

6. Balanced development:-
Government control over certain industries in order to give equal importance to all the regions of the country. Some enterprises are started in undeveloped areas of the country for the purpose of reducing of goods and its prices.

7. Protection of consumer:-
This is required to ensure that there is no exploitation of consumer by monopoly powers. State ownership is therefore, desired to protect the consumer from selfish hands with a view to regulating the supply of goods and its prices.

8. Maximum utilization of sources:-
There are certain national sources which cannot be utilized to the maximum but by the government Oil, Gases, minerals and Sea resources are allocated option for the best interest of the public.

9. Centralized management:-
Various departments and enterprises are controlled by the govt. on account of the fact that centralized management is required for the object of coordinating and saving in the expenses of management.

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