ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Urban Bias in PDS-Reexamination of NSS Data

public enterprises arc inefficient or that public sector managers are all incompetent, but that in a comparative advantage sense government resources and talent ait better used elsewhere. I do not deny that for historical or tactical reasons, some departures from this approach or a phased move in this direction is all that can be attempted given the democratic setting in which we operate. It is important, however, to be conceptually clear as to what is to be retained in the public sector and why. An implication of this approach, for example, is that a government that has taken over a textile mill or engineering firm at some point will, after the needed corrections or changes are made; be prepared to sell it to others, even if profits begin to be made as its limited resources and talents arc urgently required to address, say, human resource development issues. The concept of opportunity cost is relevant to government too! A final point on why it is essential to encourage the shift of private goods production to the private sector. The indiscriminate expansion of the public enterprise sector at the central and state levels has not only caused an overload and poor public accountability in the government system, but also has contributed to the neglect of important functions which only a government can perform. In India, basic public functions such as maintenance of law and order, legal and judicial reform to facilitate contract enforcement and justice and to reduce transaction costs, human resource development of the poor (in which a recent UN Report ranks us lllth in the world) and reduction of inequalities with special attention to backward areas and the expansion and upgrading of the basic infrastructure facilities needed for economic and social development are examples of priority tasks to which government needs to give urgent attention. The function of supervision and corrective action taking which is a key function in any govern ment is weak in many of our public agen cies with disastrous consequences for implementation as we have just seen from the recent banking sector fiasco. There is no shortage of suave bureaucrats, but monitoring, and supervision are often left to some lowly clerks. Furthermore, as Rudra has rightly emphasised, government's regulatory and information role assumes special significance in the context of the production of goods with monopolistic features, externality effects, environmental impacts and other factors that producers (whether public or private) are likely to exploit and that the public is unable on its own to rectify. In this sense, a major task of the government is to make the market system work efficiently and effectively. This is only a partial but by no means a minimalist agenda of challenges for the state, I would rather have a government address these problems with the best talent

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