Question

Short Answer Type Questions: Explain the concept of public sector and private sector.

Answer 1

The public sector usually comprises of organisations which are operated by the government. The main motive of a public sector is public welfare. Funding is usually raised through the help of public or budgets allotted for different ministries through various levels of government. The public sector mainly comprises of 3 types of organisations:

• Departmental undertaking- It is a type of organisation which is run by a ministry or a separate department of the Government. Ex. Indian Railways
• Statutory corporation- It is an organisation formed by a special act formed by the parliament or state legislature. Ex. State Bank of India
• Government company- It is an organisation in which the government owns atleast 51% of the paid up share capital. Ex. Coal India Ltd
  

The private sector comprises of commercial enterprises owned by an individual or a group of individuals. The main motive of a private sector is profitability. Funding is raised with the help of individual investments or through shareholders. It mainly comprises of:

(i) Sole Proprietorship: It refers to the form of organisation where business is owned by a single individual. He manages and controls and bears all the risks arising from the business.

(ii) Partnership: It is defined as an association of two or more persons who agree to carry the business together and share the profit as well as bear the risks together.

(iii) Joint Hindu Family: This business is owned and carried on by the member of a Hindu Undivided Family which is governed by the Hindu Law.

(iv) Company: It may be defined as an artificial person existing only in the eyes of law with perpetual succession, having a separate legal entity and common seal. It is of two types -(a) Private and (b) Public.

(v) Multinational Corporations: These companies have their operation spread across one or more countries other than its host country. Ex: Google