What are the main objectives of state enterprises?

The main objectives of state enterprises.

The fundamental objectives of the state enterprises are to serve the people and help in developing a state of industrialization in the country.

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The following are some of the pivotal objectives of the state enterprises:


To check the formation of monopolies: When business are left in the hands of private individual, it will develop monopolistic position in certain fields. To have check on the growth of monopoly, the government has taken active part in commercial undertakings through public enterprises.

Facilitate all-round industrial development: Private entrepreneurs invest in those projects which are profitable but government wants to develop all types of industries irrespective of profit. Besides, some industries are necessary where private investors are reluctant to invest. By this public enterprises makes an all-round development in the country.

Public welfare: The establishment of public enterprises lead to public welfare because welfare because the government enters into business field with prime consideration of rendering services. The government will take business which are less profitable and thereby it increases public welfare.

provide Necessities: Public enterprises undertake to provide various necessaries like electricity, coal and gas to the people. The pivotal objective is not to provide these necessities but provide them at a cheaper rate. private sectors are not allowed to take up business in those fields because of the chance of more exploitation.


Create employment opportunities: The establishment of public enterprises create employment opportunities in the country and solve effectively the state of unemployment situation.

Channelising of public savings: Public enterprises help in chennelising public saving to better profitable investments. The process of development requires huge amount of investment and this huge investment necessitates the need of public savings. Most of the public savings are being available through nationalized banks and financial institutions.

Avoid concentration of economic power: When private sectors are given a free hand, they will lead to get more profit by exploiting the people. This will lead to the concentration of economic power in the hands of few persons. This state of business is removed by creation of state enterprises. Besides this, public enterprises leads to balanced economic growth by undertaking business projects in all fields.

Exploitation of natural resources: Public enterprises are necessary for effective exploitation of natural resources when private sectors do not intend to have risk capital in exploitation of natural resources. Oil and Natural Gas Commission spends a lot of money on exploitation of natural resources.


To carry production in certain sensitive areas: There are certain areas where the production is to be undertaken with a great precaution and secrecy. In those areas, public enterprises provide a great deal of advantages. The production of defense equipments are exclusively undertaken by public enterprises because of the above reasons.

Increase in government revenue: Since most of the state enterprises are undertaken on commercial lines, it’s surplus can provide a substantial revenue to the government. The enterprises which are running at a profit provide a major part of the revenue of the government and helps in the preparation of a budget.

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