The phenomenal growth of private sector of India can be attributed to political will, financial reforms, usage of more advanced technology, young and large English speaking working class. The 7-8 % of annual GDP growth rate India is the one of the highest growth rate in the world. The last 15 years witnessed a phenomenal rise of the growth of private sector in India. The opening up of Indian economy has led to free inflow of foreign direct investment (FDI) along with modern cutting edge technology, which propelled India's economic growth.
Previously, the Indian market were ruled by the government enterprises but the scene in Indian market changed as soon as the markets were opened for investments. This saw the rise of the Indian private companies which prioritized customer's need and speedy service. This further fueled competition amongst same industry players and even in government organizations. Further, the government of India also divested some of its enterprises to ensure smooth operation of these companies which was otherwise were loss making. It also went further and forged joint venture private Indian companies, especially in sectors like, telecommunication, petroleum, housing and infrastructure. This inculcated healthy competition and benefited the end consumers, since the cost of service or products come down substantially.
B grade private Indian companies are also offering lucrative and competitively priced products or service, whose quality is at par with A grade companies. Big players of Indian markets have been forced to lower their price bands to remain alive in the competition. Further, these big private Indian companies are offering mouth watering benefits in the form of gifts, rebates and even holding lucky draws to stay ahead in the race of 'market supremacy'. Gone are the days when 'brand loyalty, accounted for big customer base. Today, general Indian customers are trendy, flexible and are extremely flexible with their choice. Steady growth of private sector has sent a sense of urgency and insecurity amongst main market players. Defensive methods of protection of Brands against competitors are becoming popular. Legal instruments like patents, trademarks, industrial designs and copyrights filing has increased many fold and so is counter claim and litigation. Further, Mergers and Acquisitions, collaborations and licensing has become a popular amongst private Indian companies.
The best thing that has happened to the overall Indian market with the growth of private sector is that it has helped to shed bureaucracy and lengthy official process and supplemented it by customer eccentric service, good work ethics, professionalism and transparency of accounts.
Some positive effect of the growth of private sector in India are as follows
- Manufacturing registered 11.9% growth
- The passenger vehicles sector grew by 11.61% during April-May 2007
- Electricity, gas & water supply performed well and recorded an impressive growth rate of 8.3%
- Construction growth rate rose to 10.7%
- Trade, hotels, transport and communication registered a growth rate of 12%
- Financing, insurance, real estate and business services recorded an impressive growth rate of at 11% during the 1st quarter of this fiscal
- Exports grew by 18.11% during the 1st quarter of 2007-2008 and the imports shoot up by 34.30% during the same period
- The food sector is estimated to be of US$ 200 billion and it is expected to grow to $310 billion by 2015
- Merchandise Exports recorded strong growth