Explain how public sector contributes to the economic development of a nation.

Public sector contributes to the economic development of a nation in following ways:

1. The purpose of the public sector is not just to earn profits. Governments raise money through taxes and other ways to meet expenses on the services rendered by 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. Therefore, government has to bear part of the cost.
2. There are a large number of activities which are the primary responsibility of the government. The government must spend on these. Providing health and education facilities for all is one example. A healthy and educated workforce makes the nation stronger and is a necessity for the economic development of the nation.
3. Government provides a number of facilities that are for well being of people and contribute to economic development. For example : minimum support price to farmers, providing water and sanitation facilities, human development and housing facilities to poor. These steps are necessary for the upliftment of poor and to make them a part of the mainstream productive population.