Why some scholars argue that the state should get out of areas which the private sector can manage and the government may concentrate its resources on important services which the private sector cannot provide?

Many public sector firms incurred huge losses but continued to function at that time. 

As many public enterprises incurred huge losses but continued to function because it is difficult to close a government undertaking even if it is a drain on nation's limited resource. This does not mean that the private firms are always profitable. However, a loss-making private firm will not waste resources by being kept running despite the losses.