Assertion (A): A good financed through the budget and used without any direct payment is a case of public provision even if a private firm produces it.
Reason (R): When goods are produced directly by the government, it is called public production.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Both (A) and (R) are true but (R) is not the correct explanation of (A).
Assertion (A): A good financed through the budget and used without any direct payment is a case of public provision even if a private firm produces it. — True. Public provision is about financing, so the producer does not matter.
Reason (R): When goods are produced directly by the government, it is called public production. — True. This is the meaning of public production.
Why R does not explain A?
R only defines public production. It does not say why a privately made good can still be public provision.
A holds because public provision means the good is financed through the budget and used without direct payment, whoever produces it.
Public provision and public production are different ideas: one asks who pays, the other asks who produces.
NCERT (2026-27): “Allocation Function of Government Budget … There is, however, a difference between public provision and public production. Public provision means that they are financed through the budget and can be used without any direct payment. Public goods may be produced by the government or the private sector. When goods are produced directly by the government it is called public production.” |