Question

Long answer questions.

What is meant by 'Private Sector ? Explain the importance of private sector.

Answer 1

Private sector refers to that part of an economy which is owned and managed by individuals or companies with the sole motive of earning profits. In other words, it encompasses all organizations that are not owned or operated directly by the government. In most of the free economies (where the government has a minimal role), the private sector employs a significant portion of the workforce.

Following are the points that highlight the importance of private sector:

1. Quick decision making- Private sector industries have structures and management in such a way that ensures quick decision-making. This saves on time and efforts.
2. High efficiency- They set their goals in a manner that the efficiency targets are met well in time. This increases the efficiency of working of the overall sector.
3. Reduced wastage of resources- In private industries, the management keeps a constant eye on its employees, which helps check inefficiencies and reduce wastage. This leads to optimum utilization of human as well as capital resources.
4. High research and development- Private sector enterprises have various research and development centres (R&D) that come up with new technologies to minimise costs.
5. Customer satisfaction- One of the primary objective of private sector enterprises is customer satisfaction which ensures that the customer preferences are taken into account and the society benefits from the private sector.