Private Sector in India

Helpful in Industrial Development

• Private sector plays a dominant role in economic development.
It enhances the process of industrialization.
• All the private entrepreneurs are worked for profit motive.
• They actually played a leading role for the introduction of new
commodities, new techniques of production, new plants
equipment’s and machineries. Private entrepreneur has
innovative ideas and always modifies the total method of
production.
• After the introduction of new industrial policy in 1991, private
sector leads a vital role in country’s industrial development.
 Contribution to Agriculture:
• India is an agro based economy. The share of
agriculture and its allied activities like fishing,
poultry, cattle rearing, animal husbandry, dairy
farming etc. to the national income is nearly 22%.
• On the other hand, about 60% of the total working
population is engaged in this area. Hence, this large
agriculture sector is controlled & managed by the
private sector.
Small Scale and Cottage Industry:
In India, small scale and cottage industries are
playing an important role in the industrial
development of the country.
The entire small scale and cottage industry is
owned and managed by the private sector.
As these industries are mostly labour-intensive
in nature, thus they can utilize the local
employment opportunities suitably.
 Trading
• Both the wholesale and retail trade in India are in the hands of private sector.
• In a big country like India, having a huge size of population, the entire trading
activities are managed by the private sector in a best possible manner.
• But in case of scarcity of any essential commodities, the private businessmen
have their natural tendency in resorting to hoarding and black marketing of such
commodities leading to exploitation of the consumers.
• In order to control such illegal activities, the Government has introduced
various control and regulatory measures in the form of controls on price,
movement of goods and on storage etc.
• Moreover, the Government has been procuring food grains through its
organisation Food Corporation of India (FCI) and has introduced a huge
network of the public distribution system (PDS) to participate in the trading of
essential commodities for the interest of the consumer.
 Services Sector:

• The services sector of the country is almost

totally under the control of the private sector.
• The entire professional services, repairing
services, domestic services, entertainment
services etc. are solely rendered by the private
sector throughout the country.
 Major earner of foreign exchange
• Private sector is the major earner of foreign
exchange.
• It has been exporting readymade garments,
precious gems,stones,ornaments handicrafts
etc.
 Rate of profitability
• Private sector is more efficient than public
sector.
• It generating ,on an average 9.8 % profit and
against the average 5.6% in the public sector.
• Private sector generating more profit, which is
very important for the growth process.