Which sector is better private or public

Public sector versus private sector

Difference Between Public and Private Sector

Private banks can be defined as banking institutions where the majority of the shares are held by the private equity holders while Public Sector Banks (also known as government banks) can be defined as banking institutions in which the majority of the shares are owned by the government.

What is the public sector?

The public sector includes any company, company, or establishment in which the government owns the company through a controlling interest in the company. These companies are controlled, managed and operated by the government.

Corporations owned, controlled and managed by government / government agencies fall under the public sector.

What is a private sector?

The private sector includes those companies, firms or establishments that are owned by individuals or private companies. Private sector companies are controlled, managed and operated by private individuals / private companies.

Companies owned, controlled and managed by private companies / individuals fall under the private sector.

Public and private sector companies in the Indian context

Companies such as National Thermal Power Corporation, Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited, State Bank of India, and National Highway Authority Limited are examples of public sector companies operating in India in the power, oil and gas industries , Banking and road construction.

There are numerous examples of companies operating in the private sector in India. Reliance Industries Limited, HDFC Limited, HDFC Bank and ICICI Bank are some examples of private sector companies in the Indian context.

Public sector versus private sector infographics

Here we offer you the 11 most important differences between the public and private sectors

Public Sector vs Private Sector - Key Differences

The main differences between the public sector and the private sector are as follows:

  • Public sector companies are designed to provide larger people with basic public services, while private sector companies are entirely for-profit.
  • The government prefers to retain ownership of companies involved in utilities such as water, electricity, roads, agriculture, and also industries that are national security sensitive. Private sector companies have a wide variety of industries to operate with a growing privatization trend.
  • Both public and private companies can be listed on stock exchanges and their shares can be publicly traded
  • Public sector companies are prone to more government intervention than their public sector counterparts for a number of reasons, including political reasons
  • The government has control over the pricing of products in public institutions, which private companies do not
  • Public sector firms are relatively better positioned than private sector firms because of government support in mobilizing market funds
  • Public sector companies may be asked by the government to fund the government budget deficit by declaring the dividend, which private sector companies do not.

Public sector versus private sector head-to-head differences

Let us now consider the direct difference between the public and private sectors

Basepublic sectorPrivate sector
definitionThe public sector refers to that part of the country's overall economy that is controlled by the government or various government agencies.The private sector refers to that part of the country's overall economy that is controlled by individuals or private companies.
propertyPublic sector companies are owned and managed by the government / ministries / state government / government. bodyPrivate sector companies are owned and managed by individuals and private companies.
Main purposeIn general, public sector companies have the purpose of providing basic public services to the general public at a reasonable cost in their respective industries, while also making them self-sustaining and profitable. However, profitability is not the main motive.The purpose of companies in the private sector is to make a profit by following the rules and conformities of each country.
Industry focusPublic sector companies mainly operate in industries such as water, electricity, education, oil and gas, mining, defense, banking, insurance and agriculture, etc.Private sector companies generally operate in a variety of industries, such as: B. Technology, banking, financial services, manufacturing, pharmaceuticals, real estate, construction, etc.
Government financial supportPublic sector companies receive every possible financial assistance to the government, even in adverse circumstances where the companies' financial health is not good.Very little or no government funding unless a private body is too large and systemically important to the country.
Listing on the stock marketsPublic sector companies are publicly traded on exchanges.Private sector companies are publicly traded on stock exchanges.
profitabilityPublic sector companies are relatively less profitable because they are not primarily intended to be driven by profitability.Companies in the private sector are relatively more profitable than their public sector counterparts in the same industry.
Government interventionBecause public sector companies are owned by the government, they are subject to the uncertainties associated with adverse government decisions and major government intervention.Private sector companies are relatively less exposed to government intervention.
Easy business dealingsPublic sector companies find it relatively easy to operate in a country due to their proximity to governmentPrivate sector companies find it relatively difficult to operate and manage regulatory issues and compliance in a country when compared to public sector companies
Resource mobilization (financing)Better able to raise funds from the market as the government provides assistance regardless of the company's financial health.Depends on the financial strength of the private sector. Stronger finances, better ability to raise funds from the market.
Work culture for employeesRelatively relaxed work culture with higher job security. However, wages and benefits may not be as attractive when compared to private sector companies.Competitive work culture with performance-oriented career growth and better pay compared to public sector companies.

Conclusion

The public and private sectors differ fundamentally in terms of the type of property and the purpose of their existence. The companies that operate in both the public and private sectors are vital to a country's economy and coexist in the economy. There are certain industries that it makes sense for the government to own and run the businesses in that industry. Industries like defense, where many things are sensitive from a national security perspective, are owned and managed by the government. However, the private sector makes up a large part of a country's overall economy and has recently participated in almost all companies / industries at multiple levels of the value chain.