Wednesday, May 18, 2011

Briefly explain the growth of private sector in India.

Briefly explain the growth of private sector in India. Also mention the major differences between private and public sectors.

A major segment of the organized private sector is the corporate sector. Let us now look at the private corporate sector: As the organized private sector is generally equated with the private corporate sector in a narrow sense, it is convenient and useful to study the growth of private corporate sector and compare it with the growth of public sector. Table brings out clearly the growth of the corporate sector in India over the period 1957 to 1991. The public sector companies in the early 1990’s occupied a major position in terms of the amount of paid up capital. Even though the number of government companies the rate of growth of public sector companies has been faster than those of the private sector companies. Between 1957 and 1991 the number of government companies increased by nearly 16 times from 74 to 1779. During the same period, the number of non-government companies increased by about 7.5 times only, from 29283 to 219542. As can be seen from table the same is the trend in respect of paid-up capital.
The largest industrial activity among the private sector corporate units in terms of paid-up capital was processing and manufacture of foodstuffs, other processing and manufacture, commerce, agriculture and allied industries, construction, etc.
Selected Growth Rates
Table gives selected growth rates in respect of organized private and public sectors. Nominal sales (value of sales at current prices) in the case of corporate private sector recorded a growth rate of 17.93 per cent during the period 1985 – 1995, while the corresponding growth rate for public sector was 13.18 per cent. Gross fixed assets in the case of private corporate sector recorded an annual growth rate for public sector being 15.1 per cent. Profits before depreciation interest and tax (PBDIT) in the case of private sector grew at an annual average rate of 22.0 per 16.2 per cent. Thus during the recent decade all the growth rates mentioned above are higher in the case of private sector as compared with the public sector.

The public sector is relation to the private sector. Any activity owned, controlled, and managed by the government (Central, State and local) comes under public sector. After the attainment of independence and the advent of planning, there has been a rapid expansion of the scope of the public sector.

There are four types of public sector enterprises in India:

1. Those which are managing by the department (departmental enterprises such as the Indian Railways)
2. Those which are managing by the independent boards.
3. Those which are running as public corporations (which comes into the act of Parliament)
4. Those, which are organising as by the companies (registered under the Companies Act.)

The objectives of the public sector, can be briefly described as:

1. to accelerate the economic growth and industrialisation of the country by creating the necessary infrastructure for development;
2. to promoting the fair distribution of income and wealth, interpersonal as well as inter-regional;
3. to promoting the balanced regional development;
4. to promote the growth of strategic defence-oriented industries;
5. to assist the development of small and ancillary industries;
6. to create employment opportunities;
7. to getted socialist pattern of society;
8. to ignore and circumvent the limitations and abuses of the private sector; and
9. to generate forces of economic and technological self-reliance.

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