Written by : Rajiv Singh

A Chartered Accountant in UK with 15+ years of experience in FinTech Consulting, Accounting & International Taxation. I enjoy being a Social, Foodie and Father of two young children, reachable at linktr.ee/RajivSingh.

Major Difference between Public Sector & Private Sector in India

Rajiv Singh
Rajiv Singh, CA, FAIA

Aug 5, 2021 15:28

The days of the economy being dominated solely by the public sector are long gone. Many nations have implemented privatization policies, and the private sector is growing in significance as a result. Every economy is organized into several sorts of companies that define its operation and growth. It encompasses private and public sector companies, which you must thoroughly comprehend for research purposes. Both sectors must work together to advance and develop since just one sector can lead the country to success.

Public Sector

Public Sector entails corporations, organizations, or businesses in which the government owns a majority stake in the company. The government owns, manages, and operates these companies. The centre or state wholly or partially controls such organizations. They come under the purview of a different ministry. Some public-sector organizations are established via an act of parliament.

A public company typically focuses on delivering lower-cost goods and services to the broader population. It comprises federal government bodies, state government institutions, and even municipal government authority. This industry may be generally split into two categories driven by government authority.

  • It is funded completely by a government entity through revenue such as taxes, customs, other fees, etc.
  • A government body owns more than 51% of an enterprise's share capital.

Private Sector

The private sector entails companies, corporations, or businesses owned by private individuals and private corporations. Private Individuals/Private Entities oversee, coordinate, and control the enterprises in the Private Sector. To put it simply, the businesses are run by private companies/ individuals. This industry is made up of several firms that are categorized per their scale and key competencies. It comprises both small and medium-sized businesses and large corporations. They may also be privately or publicly traded companies.

Existing public-sector firms might potentially get privatized. Typically, these businesses are operated with a single goal in mind: to maximize profit. This strategy is often pushed through developing a brand reputation. These businesses must adhere to government standards and laws. These, however, are not regulated by the government and tend to prioritize quality above number. A private sector offers maximum employment opportunities emphasizing the performance of the employee for stability.

Public Sector vs Private Sector in India- the key differences

There is fierce competition between the two sectors to demonstrate that one is superior to the other. As a result, the blog aims to outline the distinctions between the public and private sectors based on certain factors. These are as follows:


Public Sector is a portion of a country's economy that is owned and controlled by the government. These include central, state, or even regional government organizations.

The private sector is a sector of the national economy owned and run by a private group of people or private companies.


The primary goal of the public sector is to serve the whole population of a country using the available resources motivated by the goal of delivering fundamental public services to the general public at a fair cost while simultaneously being self-sustaining and lucrative in their respective sectors. However, profit is not the major motivation.

Contrary to it, the objective of the private sector is profit maximization. Companies in the private sector exist to make a profit while adhering to the laws and regulations of their respective countries. The private sector extensively focuses on the development of a brand value.


Government/Ministries/State Governments/Govt. Bodies own and oversee public sector enterprises.

Private individuals and private firms operate and manage businesses in the private sector.

Industry focus

Public sector firms primarily operate in industries such as water, electricity, education, oil & gas, mining, defence, banking, insurance, armed forces like police, army, air force, navy, basic health and transport facilities, so on and so forth.

Companies in the private sector often engage in various areas, including technology, banking, financial services, manufacturing, pharmaceuticals, real estate, and construction.

Source of capital

Public revenue revenues such as taxes, excise, and other levies, treasury bills, bonds, etc., are used to generate capital in the public sector.

In the case of the private sector, capital can be generated by loans, issuing shares and debentures, or other sources.

Government interference

For a multitude of reasons, primarily political concerns, public sector enterprises are more prone to government interference than private-sector equivalents. As the government controls public-sector firms, they are vulnerable to the risks associated with adverse government choices. In public sector firms, the government has a monopoly on product price but not on private enterprises.

On the other hand, private-sector firms are less vulnerable to government intervention.

Benefits received

People strive to work in the public sector or for the government because of the job stability, different pension benefits, allowances and perquisites, and so on.

In the private sector, you'll enjoy multiple benefits like higher pay packages based on success and merit, a challenging workplace culture, performance bonuses, and so on. But here, your job isn't secure; even if you work for it for years, you can be thrown at any time for making a single error.


Companies in the public sector are less lucrative than private-sector companies since their primary goal is not to maximize profits but the overall development of the economy.

Moreover, private sector enterprises are more lucrative and competitive than their public-sector counterparts in the same industry.

Basis for promotion

When it comes to government employment or public sectors, seniority and years of service are the essential considerations.

Contrary to it, private sectors are completely goal-oriented organizations, so when it comes to promoting employees, performance is given due consideration. It is typically based on merit and growth, as well as dedication and production characteristics.

Work culture

The work culture in the public sector is fairly mundane and lacks growth, whereas the workplace culture in the private sector is more relaxed, with more job security. There is no rush to get things done or meet deadlines here. Compensation and benefits, however, may not be as tempting as they are in the private sector.

Since the private sector is fairly competitive, it encourages a work environment fueled by results, career advancement, and higher compensation, prospects, and perks. Here performance is king, the task is heavy, but it keeps you busy.

Businesses under both public and private sectors are fundamental towards every national economy and coexist with it. Both private and public enterprises must go through the process of launching concepts, registering, and licensing, and that is what we do- we assist! The process of incorporating a business appears to be a headache. It may appear to be a never-ending maze of compliances. That's where Gotaxfile can help! Our excellent team can assist you in starting your company in India, from registration to payment of taxes.

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Rajiv Singh
Rajiv Singh, CA, FAIA

Aug 5, 2021 15:28

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