Which of the following statement (s) is/are correct?
Statement 1: There were quite a few of the public sector firms in India which were originally private firms.
Statement 2: Some of the private firms were nationalised in India to protect the jobs of the workers.
Answer & explanation
Correct answer: option 3
The correct answer is Option 3: Both the statements are correct.
Many public sector firms incurred huge losses but continued to function because it is difficult to close a government undertaking even if it is a drain on the nation’s limited resources. This does not mean that private firms are always profitable (indeed, quite a few of the public sector firms were originally private firms which were on the verge of closure due to losses; they were then nationalised to protect the jobs of the workers). However, a loss-making private firm will not waste resources by being kept running despite the losses.