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Question – 1. Private sector is the driver of growth and employment in India. How government can supplement efforts of private sector in driving the economy?

 

Answer: The private sector and public sector make up the two facets in an economy. In developing economies, public sector facilitates the growth due to absence of strong private sector. In modern and developed economies, private sector is the biggest contributor.

Role of private sector in economic growth

  • Generate employment
    The public sector is incapable of providing employment to all eligible population. The private sector steps in and provides employment to the vast workforce.
  • Tax Contributions
    Private sector is the second biggest contributor of direct taxes in form of corporate taxes. The tax can be utilised by the government to redistribute income and initiate social welfare measures.
  • Technology growth
    For the economy to grow, technological advancement is a must. Public sector does not have the necessary resources to adopt large-scale modern technology.

 Role of government in supplementing efforts of private sector

  • Incentives
    Incentives can be given in form of tax cuts and other perks for achieving targets such as exports or production. This will inspire them to achieve bigger goals.
  • Liberalised policies
    Policies should be favourable for private sector. This will remove barriers in setting up new companies, conduct international trade and function without threat of government interference.

Thus, private sector needs to be encouraged to expand and contribute to nation’s growth. For private sector to sustain, the government should ensure level playing field between all players.

Tags: GS 3 (Indian economy)
By: Raghunandan

Updated on 17 Jun 2022 |   Added on .17 Jun 2022  |  by admin