As the private sector is mostly guided by the profit maximisation motive for the owners and have little consideration for the national objectives and priorities, thus it may adopt certain undesirable steps which may go against the interest of the consumers as well as the nation itself.
1 . Too Much Emphasis on Low-Priority Industries:
The first important limitation of the private sector in India is that during the last four decades it has invested most of its capital on the development and expansion of consumer goods industries, having low priority elitist bias, like Television and other electronics, man-made fibres, refrigerators, automobiles, perfumes and cosmetics, air conditioners etc.
2. Emergence of Monopoly Power and Economic Concentration:
Since introduction of development process along with economic planning in the country in 1951, some existing industrial and business houses got the advantage to avail all those facilities provided by the Government and gain its control over certain industries and gradually became monopolistic in character. In this way, 20 big industrial houses with Tatas and Birlas at the top have emerged as the top economic leaders of the country, which are controlling the economic lever of the country as per their own interest.
3. Concentration of Black Money:
Growing economic concentration along with growing tendency on the part of the individual to avoid taxes has led to a huge concentration of black money in the hands of private sector.
4. Industrial Disputes:
The private sector in India has been suffering from poor industrial relations. Since independence, the country has been experiencing a good number of large scale strikes and lockouts leading to a valuable loss of man-days as well as production.
5. Industrial Sickness:
Another important limitation of the private sector in India is the problem of growing industrial sickness in different lines of industrial and business activity. In India, industrial sickness was very much common to engineering industry, cotton and jute textiles industry. The factors which me mostly responsible for such growing industrial sickness in the country include inefficient and corrupt management, lack of proper marketing strategy, poor labour relations and faulty government policy.
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Urban Development Policies Study notes for M. plan Sem-II
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