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Private Sector and Public

There are various types of business firms — small or big, trading or industrial owned by private heads or owned by government present in our country. These establishments bring an impact on our day-to-day economic life and hence become a part of our country's economy. As our economy comprises of both private and government owned business enterprises, it is called a mixed economy. The Government of India has chosen for a mixed economy whereby both government and private establishments are allowed to operate. The economy, hence, may be categorized into two sectors namely. public sector and private sector. The private sector comprises of business owned by an individual or a group of individuals, as you have studied in the last chapter. The different types of organisations are sole or single ownership, joint venture, joint Hindu family, cooperative and company. On the other hand the public sector comprises of various organisations that are owned and managed by the government.

organisations could either be wholly or partly owned by the state or central government. They may also be a part of the ministry or come into existence by a Special Act of the Parliament. The government participates in the economic activities of the country through these organisations. From time to time, in the industrial policy resolutions, the government defines the area of activities where the private sector and public sector are allowed to function. Government of India, in its Industrial Policy Resolution 1948, had specified its move towards the growth and development of the industrial sector. The roles of the public and private sector were undoubtedly defined and through various Acts and Regulations the government was overseeing the economic activities of both the public and the public sector. Certain objectives were also laid down in the Industrial Policy Resolution, 1956 for the public sector to follow so as to enhance the rate of growth and industrialisation. Emphasis was laid on the mutual dependency of the public and private sectors though a lot of importance was given to the public sector. The 1991 industrial policy was totally different from all the previous policies where the government was deliberating disinvestment of public sector thereby offering more freedom to the private sector. Simultaneously, international business investment was welcomed from business enterprises outside India. Thus, global enterprises and multinational corporations that operate in more than one country gained entry into the Indian economy. Thus, we have private sector houses, public sector units and international enterprises that exist in parallel in the Indian economy.

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