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The Big Picture – Private Sector’s role in the Indian Economy


Ever since the Liberalization process started in 1991, the role of private sector in the economy has been growing significantly.

As the size of the Private Sector has grown, so as the size of the economy.

Private Sector is mainly worried about the high interest rates and difficulty in getting capital.

Medium and small industries provide the bulk of the employment. When they flourish, the unemployment rate would come down. Cost of capital should go down for medium and small industries.

Private sector has high political role in policy making without the same economic investment in the country.

The private sector is still smaller than the public sector in terms of investment.

To reform the economy, it is necessary to make the public sector profitable and take the public sector into consultative process.

The private sector feels that this is not an easy country to do business in.

Private sector’s role in manufacturing has nearly doubled since liberalization. Public sectors’ role has remained the same.

Crony capitalism is said to have been existed because of the broken politics.

Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favouritism in the distribution of legal permits, government grants, special tax breaks, or other forms of state interventionism.

Corporate debt burden has grown over the previous years.

Public sector has got predominant share in NPAs and they are less accountable.

There is also a general feeling that private sector is more efficient than public sector.

It is necessary to raise the morale of the private sector.