Private sector in india by Sakshi Mittal

1. Private Sector in India
From
Sakshi Mittal
Assistant Professor
PGCGC-11
Chandigarh

2. Contents
• Meaning
• Growth of Private sector in India
• Role of Govt. in growth of private sector
• Importance of Private sector in economic
development
• Limitations of Private sector
• Private sector and New Economic Policy

3. MEANING
Private sector is that organisation which is owned, managed
and controlled by private individuals or private institutions.
Maximization of profit is main motto of private sector. Since
industrial policy 1991, role of private sector has increased.

4. Growth of private sector in India
• Increase in the number of private sector
companies from 19,283 in 1957 to 10,87,256 in
2016.
• Increase in employment in the private organised
sector.
• Growth of Big Business Houses e.g. Tata, Birla,
Reliance etc. there is significant increase in their
assets.
• In march 2015, 5.11 crore micro, small and
medium enterprises were operating in India.

5. Role of Government in growth of
private sector
• Financial Assistance: Govt. set up various banks and
financial institutions to provide loans to private sector.
• Increase in areas for private sector: no. of industries
reserved for public sector has been reduced from 17 to
2.
• Liberal Licensing: licensing required for limited
industries and procedures has also been simplified.
• Support to small scale industries: given various
concessions, technical assistance, tax concessions.
• Infrastructural Facilities: basic infrastructure provided
by the Govt. promoted the growth of private sector.

6. Role of private sector in Economic
Development
• Private sector and Industrial Development: many
basic industries such as Tata Iron and Steel and
consumer industries such as Sugar, Textiles and
Jute established in private sector.
• Private sector and Agriculture Development:
Mechanization and modernization of Indian
Agriculture contributed by the private sector e.g.
Green Revolution.
• Private sector and Productivity: resulted in higher
rate of capital investment and production.

7. Limitations of private sector
• Priority to the production of non-essential goods.
• Encouragement to concentration of economic
power and monopolistic trends.
• Industrial disputes
• Industrial sickness
• Promotes corruption
• Ignores social welfare
• Increase in Regional imbalances.

8. Private sector and New Economic
Policy
• This policy envisages greater role for the private
sector.
• Seeks to create competitive climate in the
country, boosting efficiency and productivity with
the spread of privatization.
• To introduce liberalization in place of controls and
regulations.
• To encourage private foreign investment.
• In this policy no. of enterprises reserved for
public sector reduced to just 8.