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Role of Private sector in the Indian Economy | Akhilesh Jha, IPS, Ex- DIG, Gold Medalist
#privatesectors #publicsectors #unemployement #IndianEconomy

Private sector was given primacy over public sector after 1991 when India faced unfavourable balance of trade, foreign exchange reserve shortage and high inflation on account of shooting prices of oil products because of Iraq-Kuwait war. The private sector has been assigned the task of poverty alleviation, strengthening of social sectors and to achieve higher growth in the economy.

Introduction
1. ownership and the management in the hands of private individuals
2. guided by personal initiative and profit motive.
3. India registered healthy growth in capital expenditure during the first three quarters of FY 22 over 7700 new projects worth 12.76 lakh crore were announced, 47% higher than FY 20.
4. However, the private sector undertook much of the capital expenditure .
5. In comparison the public sector registered a contraction in fresh investment plans.
6. Gujrat received the highest investment amounting 2.31 lakh crore rupees , cornering 18% of total investment.
7. Maharashtra was allocated 1.51 lakh crore.
8. The maximum investments are to be done in sectors like manufacturing, mining, electricity, infrastructure, irrigation.

Concept and significance
a. mixed economy
b. mutual coexistence and mutual dependence and cooperation of the private and public sector.
c. liberalisation of the economy was started in 1991.
d. role of public sector diluted because of
1. constant loss making
2.lower contribution in the national savings
3. poor capacity utilisation
4. over staffing
5. bureaucratization
6. wastage of scarce resources
e. open the doors for multinational companies
f. raise the competition from abroad because of reduction in tariffs.
g. domestic producers suffered from shrinking market share on account of low quality and high prices.
h. the corporate sector expanded.


corporate sector and foreign direct investment

1. After liberalisation started in 1991 FDI flows into India rapidly rose from 133 crore to 61633 crore in 2008.
2. Increase the process of economic growth. In 1951 - 81 growth of NNP was 3.4% and growth rate per capita income was 1.2%. in 2004-9 growth of NNP reached 8.8% and growth rate of per capita income reached 7.2%.
3. sectoral growth rate in 2007-12, agriculture 4.0%,industry 10. 13%,services 9.11%. In all total 9% high growth rate was achieved.
structural changes in the economy, in 2009 the contribution of agriculture in GDP was 17%, industry 25. 8%,manufacturing 18. 3%,services 57.2%

Role of private sector in development
Poverty alleviation
By generating job , promoting innovation and increasing productivity
Private sector raises the living standard and promotes opportunities.
B. employment
In 2007 the contribution of the public sector in employment was 35%.(93 lakhs out 273 crores) Latest data
C. Agriculture
42.6% people are engaged in agriculture and contribute 14% in the total GDP
D. trading
This sector is under the total monopoly of the private sector.
Control wholesale and retail trade.
E. education
1.thousands of schools and colleges have been opened by private players, thereby opening the avenues for more and more students to get them educated.
F. Health
Thousands of hospitals have been opened by private players. Thereby, enhancing the better health facilities to people at large


Problems of private sector-
Profit motive
Consumer durables
Monopoly concentration of wealth
Industrial disputes.
Stiff competition from foreign companies/MNCs.
Industrial sickness

Weakness of private sectors
The benefit of high growth did not trickle down
India turned out one of the world’s most unequal country
Disinvestment of the public sector resulted into rich becoming more richer.
Greater access to opportunities by the rich
The gap between haves and have nots become wider
Privatisation led to denial of basic human needs of the majority of people.
It led to wanton destruction of natural resources, thereby causing ecological imbalances in the society.
Under frustration, the majority of people vote for authoritarian rule .
Political parties whip up the sentiments of nationalism in order to divert from the real issues.
People lost hope in the capacity of democracy and secularism.

Conclusion -
Thus it is cleared that too much dependency on the private sector will create a wide chasm between different classes of people.
This is not a good sign for the growth of healthy democracy.
A mixed role of public sector and private sector is necessary.
Government can not absolve itself from its responsibility of poverty alleviation.
To create wealth and durable assets at bottom are necessary for the body politic of India.