PM Modi’s Acknowledgement of role of private sector

Synopsis: Future growth in India should be led by the private sector. The government should encourage the private sector as a central part of its strategy.

Introduction

Recently the prime minister acknowledged the role of the private sector. Now it is up to the private sector to grow their business, pursue excellence, follow the law of the land and pay taxes.

Why the role of the private sector is critical in India?

• India has limited capital and the private sector is the best provider of capital in the economy. The private sector will deliver the most benefit in terms of growth or return on capital employed.
• Private sector focus on wealth creation. The PM also praised the wealth creators with a logic that if you can’t create wealth, you won’t be able to distribute it. The creation of wealth is essential for growth, employment and the reduction of poverty.
• India’s successes in many fields linked to the private sectors. Sectors such as banks, airlines, insurance, telecom, IT services, IT-enabled services etc were created a huge growth after they have been open up to private players.

What can be expected from PM speech?

The Prime Minister’s speech has raised the expectations that more positive reform for the private sector is around the corner.

• First, the government can now bring in policy and future economic reforms in India as it has recognised the private sector’s role in parliament.
• Second, India has been making worthy steps in the Ease of Doing Business. It is easier to start a business in India than it was a decade ago. The government is willing to listen and gives a good head start to solving those problems.
• Third, the success of the Mudra Yojana and Start-up India has proven the new wave of innovation and enterprise in young India. India is now willing to look at other sectors such as space, defence, aeronautics.
• Fourth, Private involvement in the India stack (Stack is a combination of technological projects that comprises all the technologies required to operate for any particular sector) has revolutionised the fintech sector. Now the digital health stack will likely to do the same for the health tech sector.

Suggestions:

• The private sector should now follow the law of the land and pay taxes. They should also become good corporate citizens of India or else the mistrust of the private sector might affect the sector.
• The upcoming entrepreneurs will be the strong foundations of Atmanirbhar Bharat. The recent Union Budget has made it clear that the government will pursue economic reform and go for growth.

[Answered] Economic survey 2019, pitch for wealth creation as a means of prosperity and welfare for all. Critically comment.