1. Development of infrastructure : Development of infrastructure comprising transport, power, communication, basic industries, etc. is a precondition of growth. Expenditure on the development of infrastructure is known as Social Overhead Costs. Pace of industrial development cannot be accelerated without their establishment. Their development requires huge capital investment, which cannot be mobilised by the private sector. Moreover, these projects do not promise high profits. The private entrepreneurs would therefore be reluctant to undertake them.

2. Development of backward areas : The goal of achieving a reduction in economic inequality between regions becomes easy to reach, if industries are setup in the backward areas. But the profit seeking private industrialists often are not enthusiastic enough to set up industry in the backward regions. The government, therefore, finds it necessary to start industrial production in these areas on its own.

3. Basic facilities: There are a large number of activities which are the primary responsibilities of the government. The government must spend on these. Providing health and education facilities for all is one example. Running proper schools and providing quality education, particularly elementary education, is the duty of the government. India’s size of illiterate population is one of the largest in the world.

4. Other problems : There are many other problems like malnourishment, high infant mortality rate, unsafe drinking water, lack of housing facilities, etc. which need special attention. These problems can be solved only with the help of government.