There are many economic activities which are not undertaken by the private sector either due to lack of profits or due to huge investment expenditure involved. There are many other activities like, water supply, sanitation, etc., which are necessarily undertaken by government in public interest. Government can start these activities on its own. In addition, government can encourage the private sector through tax concessions, subsidies, etc., to undertake certain production in public interest. By doing so, government helps in influencing allocation of resources.