Private Sector

PRIVATE SECTOR
INTRODUCTION
PRIVATE SECTOR
In economics The Private sector is that part of the economy which is
both run for private profit and is not controlled by the state. By contrast,
enterprises that are part of the state are part of the public sector; Private
, Non-Profit Organizations are regarded as part of the voluntary sector.
The Private Sector of India Economy in the past few years have
delineated significant development in terms of its share in the GDP. The
key areas in Private Sector of Indian Economy that have surpassed the
Public Sector are transport , Financial Services etc.
Private sector is that form business
organization in which the ownership,
management, direction and control of
business are in the hands of private
individuals.
GROWTH OF PRIVATE SECTOR
The phenomenal growth of private sector of India can be
attributed to political will, financial reforms, usage of more
advanced technology, young and large English speaking
working class. The 7-8 % of annual GDP growth rate India is
the one of the highest growth rate in the world. The last 15
years witnessed a phenomenal rise of the growth of private
sector in India. The opening up of Indian economy has led
to free inflow of foreign direct investment (FDI) along with
modern cutting edge technology, which propelled India's
economic growth.
ROLES OF PRIVATE SECTOR
Various roles played by the private sector in the General Economic
Development
In Agriculture
In Trading
In Indian Economy
In Small Scale & Cottage Industries
-
Features of Private Sector
Private Ownership
Organization of Business
Management and Control
Contributing of capital
Profit Motive
Flexibility of Operation
Dominant sector
Predominance of the small sector
Government control
IMPORTANCE OF PRIVATE
SECTOR
The importance of private sector in Indian Economy has been
very commendable in generating employment and thus
eliminating poverty. Further , It also effected the following-
Increased quality of life
Increased access to essential items
Increased production opportunities
Lowered prices of essential items
Increased value of human capital
Improved social life of the middle class Indian
Decreased the percentage of people living below the poverty line
IMPORTANCE
Changed the old age perception of the poor agriculture
based country to a manufacturing based country.
Effected increased research and development activity and
spending.
Effected better higher education facilities especially in
technical fields.
Ensured fair competition amongst market players.
Dissolved the concept of monopoly and thus neutralize
market manipulation practices.
Contd..
The importance of Private Sector In Indian Economy can be
witnessed from the tremendous growth of Indian BPO’s,
KPO’s , Indian Software Companies, Indian Private Banks
and Financial Service companies.
Indian BPO Sector is more concentrated with rendering
services to overseas clients
KPO sector is engaged in delivering knowledge based high-
end services to clients
Merits of Private Sector
Efficiency
Satisfaction of consumer preference
No political interference
Better Corporate governance
Quick decisions
Encouragement to entrepreneurial development
Encouragement to Innovation
Adoption of technology
Advantages of competition
Effective supervision
LIMITATIONS OF PRIVATE SECTOR
Profit motive
Exploitation of consumers
Concentration of Economic power
Income and wealth Inequalities
Cut-throat competition
Exploitation of workers
Focus on Durable Goods
Emergence of monopoly power and concentration.
Emphasis on Non-Priority Industries.
Industrial Disputes.
Economic instability
COMPARISION OF PUBLIC AND
PRIVATE SECTOR
Development of private sector is a comparatively slower than public
sector but investment is more than public sector.
The participation of the private sector of Indian economy is desired by
the government of India for infrastructural development including
specific sectors like power, development of highways and so on. As the
contribution of public sector in these sectors have been arrested due to
the shift of the attention of the Indian government to issues like
population increase, industrial growth.
Share of public and private
sector in net domestic product
SECTORS PUBLIC PRIVATE TOTAL
1.Agricultural, 4,545 2,65,677 2,70,222
forestry and (1.7) (98.3) (100)
fishing
2. Manufacturing 17,363 1,41,599 1,58,962
(10.9) (89.1) (100)
3. Construction 10,046 49,450 59,496
(16.9) (83.1) (100)
4. Trade Hotels 4,863 1,65,759 1,70,622
and Restaurants (2.9) (97.1) (100)
PROSPECTS
The Industrial Policy of 1991 liberalized the economy in favour of the
Private Sector by removing the asset limit of MRTP companies and thus
freed large business houses to undertake investments .in short, a
greater role for the Private Sector is envisaged in the new Industrial
Policy by removing the barriers and controls and following a more
liberalized approach. The government has been taking a series of
measures to give a boost to the Private sector for e.g. Allowing
automatic expansion of capacity to a large number of Industries special
facilities for the setting up of export oriented units, exemption from
MRTP restrictions on Industries producing for export, easy Industrial
Licenses for New Units located in “zero Industry” districts , quick and
sympathetic processing of license applications , Liberalizations of import
and pricing policies etc.

Private Sector

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PRIVATE SECTOR

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