(B) Public Sector
The government owns most of the assets, delivery of services is in government hands, and fair price shops (ration shops) are an example of the public sector.
The passage directly states: "In the public sector, the government owns most of the assets and provides all the services." The chapter also mentions government buying wheat/rice and selling through ration shops (fair price shops) as a public sector activity. All three clues in the question point to the Public Sector. Remember: classification here is based on ownership, not the nature of activity.