Public Goods Vs Private Goods

  • IASbaba
  • August 23, 2022
  • 0
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In News: Government of India has clarified that there is no plan to levy any charges for UPI services.

  • Finance Ministry said, UPI is a digital public good with immense convenience for the public and productivity gains for the economy. The clarification came amid some reports that there may be possibility of UPI transactions charge.

What are Public Goods?

  • Public goods are the commodities or services provided by the nature of the government of a country, free of cost or by taxing the few people to offer smass benefit to the public in general.

Characteristics of Public Goods

  • These commodities or services develop the infrastructure and living standard of a country.

Features of Public Goods

  • Non-Rival: The public goods are non-competitive, i.e. it can serve many people at the same time without hindering the usage of one another.
  • Non-Excludable: These goods are usually free of cost and can be used by anyone without any restriction.
  • Non-Rejectable: The consumption of such goods cannot be dismissed or unaccepted by the public since it is available collectively to all the people.
  • Free-Riding: The goods categorized under public goods benefit even those who have not paid for it. Such people are termed as free-riders.

What are Private Goods?

  • Private goods are the products or services which are manufactured or produced by the companies owned by entrepreneurs who aim at meeting customer’s requirement to earn profits through the trading of such goods in the free market.

Characteristics of Private Goods

  • Private goods serve the personal needs of consumers.

Following are the various characteristics of these goods:

  • Rival: The private products involve rivalry or competition among the consumers for its usage since the consumption by one person will restrict its use by another.
  • Excludable: These goods involve cost, and therefore the non-payers are excluded from the consumption.
  • Rejectable: Private goods can be unaccepted or rejected by the consumers since they have multiple alternatives and the right to select the product according to their preference.
  • Traded in Free Market: Such goods can be freely bought and sold in the market at a given price.
  • Opportunity Cost: These goods have an opportunity, i.e. the consumer has to let go of the benefit from a similar product while selecting a particular private commodity.

Digital Public Goods

  • Digital public goods are open-source software, open data, open AI models, open standards, and open content that adhere to privacy and other applicable laws and best practices, do no harm by design, and help attain the Sustainable Development Goals (SDGs).

Source: The Hindu

Previous Year Question

Q.1) In India, which of the following can be considered as public investment in agriculture? (2020)

  1. Fixing Minimum Support Price for agricultural produce of all crops
  2. Computerization of Primary Agricultural Credit Societies
  3. Social Capital development
  4. Free electricity supply to farmers
  5. Waiver of agricultural loans by the banking system
  6. Setting up of cold storage facilities by the governments

Select the correct answer using the code given below:

  1. 1, 2 and 5 only
  2. 1, 3, and 4 and 5 only
  3. 2, 3 and 6 only
  4. 1, 2, 3, 4, 5 and 6


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