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From the above meaning and definition, we can conclude that public enterprise is any
commercial or industrial undertaking owned and managed by the government with
a view to maximize social welfare and uphold the public interest.

Importance of public enterprises

i. Establishment of huge and basic industries: During initial stage of economic
development, the public enterprises establish key or basic industries that require
investment of huge capital and expertise in which the private sector has not
shown their interest. At the beginning of industrialization in Nepal, maximum
key industries were established under public enterprises like Nepal Telecom,
Nepal Electricity Authority, Nepal Oil Corporation, Nepal Airways, National
Insurance Corporation, etc.
ii. Uncertainty avoidance: Each and every country has their own development
plans and for the execution of such plan or to achieve the target set by government
within predetermined period, government cannot be fully dependent on private
sector. For this purpose, it initiates the establishment of industries of its own
requirement. Ultimately, it avoids the uncertainty of private enterprises for the
achievement of predetermined goal.
iii. Basis for planned development: Public enterprises play an important role for
the planned economic development of nation. Generally public enterprises make
the investment for their expansion and growth according to their plans. They
also target for investment in those industries where it requires very long period
to get the return or profit and where the private sectors lose their interest.
iv. All round development: Balanced economic growth is the main motto of
the government and to attain this motto public enterprise plays an important
role. Generally private enterprise does not want to enter in such region where
profitability is comparatively lower. But, public enterprises want to provide
service to all the regions even if the profitability is lower. So, for the balanced
economic development of the nation public enterprises are a must.
v. Job creation: Public enterprises are operated by the government with large
amount of capital and it also has wider scope. So, it requires a large number
of people to operate the enterprises which creates employment opportunity to
people and ultimately enhances the living standard of people.

vi. Infrastructure development: Development of infrastructure is a must for
the development of commerce and industry in the country. Public enterprises
have been playing an important role for the development of infrastructure like
drinking water, transportation, communication, electricity, education, etc.
vii. Government revenue: Public enterprises are one of the important sources of
government revenue. The public enterprises are involved in various business
activities and they have to pay the tax to the government in various forms like-
customs duty, corporate tax, VAT, income tax, etc. which ultimately increases the
revenue of the government.

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