Although, the inefficiency and low productivity in Public Sector Undertakings (PSUs) may lead to wastage of the scarce resources and result in huge losses forming a constraint on economic resources of five country, they do have some advantages, which are as follows
(i) The basic objective of the PSU was to provide goods and services that add to the welfare of the society without looking for profits. Public welfare facilities such as schools, hospitals, railways, electricity, etc are necessary to be provided at reasonable cost to the people of the country.
(ii) Projects like heavy and basic industries, power generation, railways, etc need a very huge initial investment and have long gestation period. Hence, government is the most appropriate to invest in these projects under public sector as private sector is reluctant to enter such ventures due to the high risk involved.
(iii) An important ideology that was inherited in the initial Five Year Plans was that the public sector should lay down the basic infrastructure required for industrialisation that would encourage and facilitate the private sector at the later stage of industrialisation.
(iv) It is believed that in public sector units, the labour is not exploited as it is protected by the government. The consumers are also not exploited by charging high prices or serving low quality goods as PSUs do not operate with profit motive.