Public and Private sectors

On the basis of ownership of assets or means of production, the economic activities can be classified into sectors and they are as follows:

Public Sector:

  • The government owns most of the assets required for production and provides all the services. Railways, post office, defense etc. comes under public sector.
  • The activities of public sector are not guided by profit motive, but by effort to provide public good and ensure public welfare.
  • The government raise money through taxation and borrowings etc. to provide the goods and services.
  • Government encourages private industries to carry out production. For example, government often supplies electricity at rates which the industries can afford and thus, reducing costs of production and increasing margin of profits.
  • Government, as in India, buys wheat and rice from farmers at ‘fair price’ or minimum support price and sells them at lower price to consumers in ration shops. This way, government supports both farmers and consumers.
  • Government for welfare purpose spend large amount of money on healthcare and education to provide these facilities to everyone in the society.
Defense Industry comes under Public Sector
Defense Industry comes under Public Sector

Private Sector:

    • In private sector, the means of production or the assets needed to production are owned by the private individuals or companies.
    • For example, TATA Iron and Steel Company Limited(TISCO) or Reliance Industries Limited etc.
    • The activities of private sector are guided by the motivation to earn profits. The companies sell goods and services to the consumers and in return are paid.
    • Private sectors do not generally involve in large scale spending of money which is a matter of risk-taking and if they do, they do not provide it to the consumers at a reasonable cost.
    • Construction of roads, bridges, railways, generating electricity etc. are not undertaken by private players due to high production costs which will make it unaffordable for consumers as well.
Axis Bank is a Private Sector Bank
Axis Bank is a Private Sector Bank
Scroll to Top