Private Sector in India

The private sector in India is one in which the ownership of assets and production of goods and services is in the hands of private individuals or companies such as Tata Iron and Steel Company Ltd., Reliance Industries Ltd, etc.

Growth of the Private Sector in India

The private sector contributes nearly 78% of the gross domestic product (GDP). It includes agriculture, cottage, and small-scale industries, trade, hotel, restaurant, and other large industries.

Role of the Private Sector in India

  • Private sector and agriculture: Agriculture and allied activities of the private sector such as dairying, animal husbandry and poultry contribute 15.7% of National Income and provide employment to 52% of the total working population. It also produces some exportable surplus.
  • Private sector and industrial development: During the pre-independence period, the private sector had set up and expanded cotton and jute textiles, paper, and iron and steel industries. However, after Independence, they produced a large number of industrial goods. They have invested in industries producing a variety of intermediate products and machines. This leads to establishment of many chemical industries such as paints, varnishes and plastics. The small-scale and cottage industry is owned and managed by the private sector.
  • Private sector and trading: The private sector regulates wholesale and retail trade in India. However, the government has tried to control private trade through the prices and transfer of goods between the regions.
  • Private sector and National Income and employment: About 80% of the National Income is contributed by the private sector and the remaining 20% is contributed by the public sector. Also, 80% of the total working population is employed in the private sector.
  • Contribution to saving and capital formation: According to Central Statistical Organisation 2008–09, the shares of the private sector in gross domestic saving and gross domestic capital formation were about 31% and 24.9% of GDP.
  • Private sector and service sector: The share of the private sector in telephone connections has increased from 5% in 1999 to 82.3% in 2009. It has expanded the services of banking and insurance.

Also, Read

Public Sector in India

Other Sectors of Indian Economy


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