Difference Between Public Sector and Private Sector

Difference Between Public Sector and Private Sector

Public Sector and Private Sector

public vs private sector

Public Sector and Private Sector

Gone are the days, when only the Public Sector was prevalent in the economy. At present, many countries have adopted the policy of Privatisation, through which Private Sector is also gaining importance. For the progress and development of any country, both the sectors must go hand in hand as only one sector cannot lead the country in the path of success. The private sector comprises of business which is owned, managed and controlled by individuals.

On the contrary, public sector comprises of various business enterprises owned and managed by Government. Such organizations are either fully or partly owned by the center or state and come under the separate ministry. Some of the public sector organizations are set up by a special act of Parliament.

A cut-throat competition between both the sectors, to prove itself better over the other sector. So, the article attempts to outline the differences between public sector and the private sector in tabular form.

Content: Public Sector Vs Private Sector

  1. Comparison Chart
  2. Definition
  3. Key Differences
  4. Conclusion


Comparison Chart

Meaning The section of a nation’s economy, which is under the control of government, whether it is central, state or local, is known as the Public Sector. The section of a nation’s economy, which owned and controlled by private individuals or companies is known as Private Sector.
Basic objective To serve the citizens of the country. Earning Profit
Raises money from Public Revenue like tax, duty, penalty etc. Issuing shares and debentures or by taking loan
Areas Police, Army, Mining, Health, Manufacturing, Electricity, Education, Transport, Telecommunication, Agriculture, Banking, Insurance, etc. Finance, Information Technology, Mining, Transport, Education, Telecommunication, Manufacturing, Banking, Construction, Pharmaceuticals etc.
Benefits of working Job security, Retirement benefits, Allowances, Perquisites etc. Good salary package, Competitive environment, Incentives etc.
Basis of Promotion Seniority Merit
Job Stability Yes No

Definition of Public Sector

The sector, which is engaged in the activities of providing government goods and services to the general public is Public Sector. The enterprises, agencies, and bodies are fully owned, controlled and run by the Government whether it is central government, statement government or a local government.

Public Sector Organizations

Public Sector Organizations

There are two types of public sector organizations, i.e. either the Government fully finances them through the revenues they raise by collecting taxes, duties, fees, etc. or the government holds more than 51% of the total share capital of the company which comes under various ministries. The enterprises are established with service motive. It is the largest sector, which works for the upliftment of the people by providing the following services to the people:

  • Generation of employment opportunities
  • Postal services
  • Providing education and health facilities at low cost
  • Providing security
  • Railway service

Definition of Private Sector

The segment of a national economy that is owned, controlled and managed by private individuals or enterprises is known as Private Sector. The private sector companies are divided on the basis of sizes like small & medium enterprises and large enterprises which are either privately or publicly traded organizations. They can be created in two ways, i.e. either by the formation of a new enterprise or by the privatization of any Public Sector Enterprise.

Private Sector Organizations

Private Sector Organizations

Business entities of the private sector are generally established with the sole objective of making profit and building brand reputation. They provide quality services to the community to win the trust and goodwill from people to survive in the long run and compete with the enemies. These enterprises also have to follow the government law and order. It is the largest sector in terms of employees.

Although in private sector performance is the basic criterion for job stability, i.e. if you perform well you will get promoted and if you won’t, you will be terminated. The major services provided by the Private sector are as under:

  • Quality education
  • Telecommunication services
  • IT services
  • Courier Services
  • Infrastructure development


Key Differences Between Public Sector and Private Sector

The following are the major differences between public sector and private sector:

  1. Public Sector is a part of the country’s economy where the control and maintenance are in the hands of Government. If we talk about Private Sector, it is owned and managed by the private individuals and corporations.
  2. The aim of the public sector is to serve people, but private sector enterprises are established with the profit motive.
  3. In the public sector, the government has full control over the organisations. Conversely, Private Sector companies enjoy less government interference.
  4. The employees of the public sector have the security of the job along with that they are given the benefits of allowances, perquisites, and retirement like gratuity, pension, superannuation fund, etc. which are absent in the case of the private sector.
  5. In the private sector working environment is quite competitive which is missing in the public sector because they are not established to meet commercial objectives.
  6. In general Public Sector uses Seniority for promoting employees, however, merit cum seniority is also taken as a base for promoting employees. Unlike Private Sector, where performance is everything, and so merit is considered as a parameter to promote them



Nowadays, Private Sector is progressing faster because promotes quality, not quantity; it encourages talent. Public Sector is full of reservations like reservations for minority section, females, a person with a disability and much more, here nobody sees talent, it is completely ignored and because of this, competent youths remain unemployed.

Public sector enterprises give so many facilities to their employees, which makes them satisfied that their job is secured, due to which, all the people are running after it like it is a marathon. However in the Private Sector, your job is never secured, even if you give years to it, you can be fired anytime just because of a single mistake.

Again in the private sector, where performance is king, the workload is much, but it keeps you active, this is missing in the public sector due to which the work sometimes becomes monotonous which creates boredom. One thing is really good in Private Sector i.e. it is corruption free. In Public Sector, you have to pay lots of money to the government officers even for a simple work, for no reason. It is an unending debate, both are good at their places, if the drawbacks are removed, they will surely prove good for the economy.


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