Concept of private and public enterprises

All types of business regardless of its being large or small, manufacturing or trading, privately or government-owned exists in India and across the globe that affects a country’s economy. Indian economy is an amalgamation of both private and government business enterprises, popularly known as the mixed economy. Therefore, the economy is further classified into the private and public sectors.

Quick link: Characteristics of Department Undertaking

What is Private Enterprise?

The private sector or enterprise are the businesses that are owned by a private group or an individual. Different types of businesses under private enterprises are a partnership, sole proprietorship, cooperative, and company.

What is Public Enterprise?

The sector or enterprises are the businesses that are owned and controlled by the government. Here, a company can be partially or completely managed by the central or state government and participate in many economic activities of a nation.

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Types of Economy

(1) Private Sector Enterprises
  • It refers to the business enterprises which are owned, managed and controlled by an individual or a group of individuals.
  • The government cannot interfere in the functions of private enterprises as it has no control over it.
  • It is that type of business units which are carried on with the motive of earning profits.
  • It can be small in size or large in size.
  • Example: ICICI Bank Limited, ITC Limited, HDFC Bank Limited, Wipro etc.
(2) Public Sector Enterprises
  • The public sector consists of various organizations owned and managed by the government.
  • These organizations may be either partly or wholly owned by the central or state government.
  • The government can participate in economic activities through these enterprises of the country.
  • The forms of organization which a public enterprise may take are as follows:
    • Departmental undertaking
    • Statutory corporation
    • Government company
Q.1 What is the difference between the private and public sector enterprises?
(1)Objective Profit maximization Social welfare
(2)Ownership Owned by an individual or a group of individuals Owned by Central Government, State Government or by local authorities.
(3)Management Managed or run by owners, partners, the board of directors, etc. Managed by the Central Government or State Government or both.
(4)Capital Arranged by owners, partners, Karta, and shareholders. Arranged by Central Government or State Government or General Public.
(5)Area of Operation Operates in all areas with the exception of national security with sufficient return on investment. Operates in basic and public utility sectors.
Q.2 State the various types of organizations in the private sector? (NCERT)


State the different types of private sector enterprises.

Private Sector
  • Sole Proprietorship
  • Partnership
  • Joint Hindu Family
  • Cooperative Company
  • Multinational Corporations
Q.3 What are the different kinds of organizations that come under the public sector?

Public Sector

  • Departmental undertaking
  • Statutory corporation
  • Government company
Q.4 Which sector of an economy is responsible for the development of the economy?

Public sector economy.

Q.5 Is there any difference between the public sector and public enterprise?

No, both are the same.

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Multiple Choice Questions

Q.1- Types of organizations in the private sector are:
a. proprietorship

b. joint Hindu family business

c. both A & B

d. none of the above

Answer: c. both A & B

Q.2- Social welfare is the objective of ______ sector.
a. public

b. private

c. both B & C

d. None of the above

Answer : a. public

Q.3- Public sectors are owned and managed by:
a. central government

b. state government

c. both A & B

d. none of the above

Answer : c. both A & B

Important Topics in Business Studies:

Departmental organisation is the oldest form of business organisation and it is common in many countries. To learn more on the concept of departmental undertakings, stay tuned to BYJU’S.


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