Introduction

Firstly, an enterprise is simply another name for a business. Secondly, and

perhaps more importantly, the word enterprise describes the actions of
someone who shows some initiative by taking a risk by setting up, investing in
and running a business.

An enterprise is a project, a willingness to take on a new project, an

undertaking or business venture. An example of an enterprise is a new start-up
business. An example of enterprise is someone taking initiative to start a
business. Enterprises can either be the private company or public company.
Also, there are many types of public sector organizations such as departmental
undertakings, government companies etc. So let us take a more detailed look
at both these types of companies and public sector organizations.

Public sector enterprises = One which is owned, managed and controlled by

the Central Government or any local authority. It is also known to provide
services to the public. Private sector enterprises = Consists of business activity
that is owned and run by private individuals.

Private enterprise is what is meant by industriousness that is directed towards

earning profits. Enterprise class is a phrase that has become common these
days, and it refers to a solution or a device meant for use in a large
organization. Whereas, Public enterprise, a business organization wholly or
partly owned by the state and controlled through a public authority. Some
public enterprises are placed under public ownership because, for social
reasons, it is thought the service or product should be provided by a state
monopoly.

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 Features

Public Enterprises
All those enterprise which is owned, managed and controlled by government is called
public enterprise. The enterprise may be fully owned by government or the majority of
the shares are held under the control of the government. Public enterprise is established
by government with the main objective of providing service of to the general public. In
general, public enterprise are established by government for those sectors which are either
too huge for private sector to invest or has low profit margin. Since, public enterprise is
established by government and government is formed by people. Therefore, public
enterprise is accountable towards general public. Although, public enterprise is
established with the service motive, the business element cannot be completely ignored.
Thus, public enterprise also charges certain price including profit in order to ensure
survival and growth of the entity. Some public enterprises are placed under public
ownership because, for social reasons, it is thought the service or product should be
provided by a state monopoly. Utilities (gas, electricity, etc.), broadcasting,
telecommunications, and certain forms of transport are examples of this kind of public
enterprise. Nepal Telecommunication, Nepal Airlines Corporation, Rastrya Beema
Sansthan, Nepal Bank, Nepal Banijya Bank are some of the examples of public
enterprises in Nepal.

According to A.H. Hanson-: "Public Enterprise mean state ownership and operation of
industrial agriculture, financial and commercial undertakings."

Therefore, from the above discussion we can conclude that the public enterprise are the
entities either solely or majority of shares being held by government or government
controlled organizations.

Some of the key characteristics/feature of public enterprise is enlisted as follows;

1.Government Owned
One of the major criteria on deciding whether any entity is public or private enterprise is
the shareholding proportion of particular entities. Public enterprise are solely owned by
government or if established with private undertakings then majority of shares(i:e
minimum 51% of shares) are held by government.

2. Government Controlled and Managed

For all public enterprise, the authority to appoint key management positions such as Chief
Executive Office, Managers, Directors rests with the government authorities. They
appoint either all or most of the stakeholders of the enterprise. Therefore, most of the
control and management is under the control of the public enterprise rest under
government authority.

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3. Separate Legal Entity
Public Enterprise are established under the provision of Special Act or Company Act
2063. Any entity established with the provision of such act deemed to become the
separate legal entity and shall have it common seal.

4. Perpetual Succession
Once created under the provision of law. Public enterprise hold the characteristics of
artificial legal entity which exist in contemplation of law. Therefore, once created under
law it has a perpetual succession. It means the public enterprise's existence will not be
hampered whether employees, directors, or any stakeholders remains or not with the
enterprise. Once created by law, it can only be dissolved by law.

5. Autonomy
Public Enterprise achieve the separate legal entity status once incorporated under relevant
law. It is independent from government and the people managing it. Therefore, on
maintaining, preparing and operating its, it shall be regarded as separate legal entity and it
shall have autonomy with regard to financial and other activities.

6. Service Motive
One of the main motive behind establishment of public enterprise is to provide needed
services to general public at affordable price. For those economic and non economic
activities which either needs huge financial investment or has low profit margin,
government takes initiatives to establish enterprises to work on such sectors over private
companies. Therefore, all activities of public enterprise is undertaken having considering
the people perspective.

7. Public Accountability
Public enterprise are owned by government. Government is elected by general people.
People pays taxes to the government which is the main source of revenue for them.
Therefore, indirectly general people are both owner and financier of the public enterprise.
Thus, all the activities and operations undertaken by public enterprise, they are
accountable towards public.
8. Business Motive
Although the main objective behind establishment of public enterprise is to provide
service to general public at reasonable price, the element of profit cannot be completely
ignored. Public enterprise provide services and products to public and other at reasonable
price which also includes some amount of profit. This profit is essential for survival and
growth of the public enterprise.

9. Notion of Monopoly
Government tend to establish public enterprise having monopoly condition for those
services which are of basic necessity of general public and requires strict control on
quality, quantity and price. Therefore, some of the public enterprise have a monopoly
power in market. For example, Nepal Oil Corporation, Nepal Electricity Authority..Etc.

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10. Stable
Public Enterprise are funded and guaranteed by government itself. Thus, the public
enterprises are stable with respect to all dimensions. Whether it is in respect of financial
stability, service stability, quality stability ...etc.

Private Enterprises

These undertakings are owned, controlled and financed by private businessmen. There is
no government participation in them. The main motive of private sector undertakings is to
earn profits. Their main characteristics are as under:

(a) Private Ownership and Control: A private sector undertaking is fully owned and
controlled by the private entrepreneurs. It may be owned by one individual or by a group
of individuals jointly. When owned by one person, it is called Sole Proprietorship. A
group of persons may jointly own the firm in the form of joint Hindu family business,
partnership, Joint Stock Company or cooperative society.

(b) Profit Motive: The main objective of private sector undertakings is earning profits.
Profits provide the reward for the risk assumed and the required return on capital.

(c) No State Participation: There is no participation by the Central or State

Governments in the ownership and control of a private sector undertaking.

(d) Private Finance: The capital of a private sector undertaking is arranged by its
owners. The sole trader contributes the capital of a sole proprietorship. In case of
partnership, capital is invested by the partners. A joint stock company raises capital by the
issue of shares and debentures. A private sector undertaking can also raise loans to meet
its long-term and short-term needs for funds.

(e) Independent Management: A private sector undertaking is managed by its owners.

In case of sole proprietorship and partnership, the owners directly manage the firm. The
management of a joint stock company lies in the hands of directors who are the elected
representatives of the shareholders.

The private sector is a key stakeholder in both urban and economic development, being a
major contributor to national income and the principal job creator and employer. The
private sector provides around 90% of employment in the developing world (including
formal and informal jobs), delivers critical goods and services and contributes to tax
revenues and the efficient flow of capital. Further, it will undertake the majority of future
development in urban areas (Venables, 2015: 5). It is increasingly being encouraged to
help leverage the opportunities, and mitigate the challenges, of rapid urbanisation (see
Topic Guides on State Business Relations, Sen 2015; and Inclusive Growth, Alexander,
2015). Private sector actors are perceived as playing a role in urban governance: they
influence whether urban areas develop in inclusive and sustainable ways, and they affect

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poverty reduction and drivers of fragility and conflict such as unemployment, exclusion
and instability (Mac Sweeney, 2008; Hameed & Mixon, 2013; Haider, 2014).

Interactive planning and decision-making processes are needed to support private sector
participation in urban governance, and to co-ordinate this participation with
municipalities. Pieterse (2000: 30-33) comments that municipalities can strengthen urban
governance in co-operation with the private sector by fostering partnerships and local
economic development (LED) strategies that combine local skills, resources and ideas to
stimulate the local economy, enabling it to respond innovatively to national and global
economic changes. For example, effective LED strategies detail how the municipality
will (ibid.):

 develop and maintain infrastructure and services;

 promote and expand existing businesses;
 address inefficiencies in the local economy;
 promote human capital development, to help vulnerable groups especially to
participate in the labour market;
 encourage community development by promoting community business and co-
operatives, local exchange systems and informal credit etc.;
 promote small, micro and medium enterprises (SMME) through supply-side
measures (training, provision of space and facilities for commercial activity etc.)
and demand-side measures (reforms to procurement policy to ensure access for
SMMEs to contracts);
 attract investment in the city.

An explicit LED strategy links long-term economic growth issues with short-term
concerns about joblessness, inequality and the role of the private sector in a sustainable
development strategy.

In fostering partnerships, municipalities need to build relations with local and foreign
private sector interests by involving associations and companies in city-wide strategic
planning processes. This can build commitment to a broader vision for the city that goes
beyond short-term interests. This might involve a formalised partnership with organised
business (e.g. PPPs) based on the municipality’s strategic vision. Other innovative
collaborations include private sector provision of managerial and technical training and
support to help municipalities improve the strategic management of urban areas (ibid.).

In many countries the informal sector is the main provider of goods and services to the
poor. City-wide development initiatives need to assist businesses with potential to mature
by eliminating punitive regulations that discourage the informal sector (UN-Habitat,
2015a). But programmes need to balance two objectives: maximising the potential of
informal enterprises to create jobs and alleviate poverty, while ensuring that necessary
social protections and regulations are in place (ibid.). Pieterse (2000: 32) suggests a
comprehensive strategy to respond to informal enterprises should include:

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  supportive policies on finance and credit that involve the formal banking sector,
government and NGOs;
 support for local exchange trading and barter systems where these can equitably be
sustained;
 supply-side measures such as the creation of incubators where informal
entrepreneurs can grow businesses with some measure of protection, alongside the
development of markets;
 consideration of home-based enterprises in planning and infrastructure
development initiatives;
 reform of procurement policies to promote links between established and
emerging businesses.

As noted, a common approach to engaging with the formal private sector is through
PPPs. They can be defined as contracts between a private enterprise and government,
providing a public asset or service in which the private enterprise bears the risk and
management responsibility and remuneration is linked to performance (Muwonge &
Ebel, 2014: 18). Involving the private sector in the design, construction and
maintenance of infrastructure and the provision of services has been highlighted as an
area where PPPs can be particularly influential. The rationale for PPPs is that they
provide a mechanism for governments to procure and implement public infrastructure
including services, using the resources and expertise of the private sector (World Bank,
ADB & IDB, 2014).

Building more and better infrastructure is an important goal for many economies with
limited public revenues (UNDESA, 2013a). Castells-Quintana (2015) shows that the
quality of urban infrastructure determines the growth-enhancing benefits of urban
concentration. Countries with good urban infrastructure can accommodate rapid
population increases in urban areas and sustain high economic growth (Alm, 2010). The
quality of a city’s infrastructure (housing, electricity, roads, airports, public transport,
water, sanitation, waste management, telecommunications, hospitals, schools, etc.) also
influences social inclusion, economic opportunity and quality of life (UNU, 2013).

The OECD (2007b) notes the scale of the challenge: global infrastructure investment is
forecast to cost $71 trillion by 2030 (about 3.5% of forecasted global GDP). Much of this
investment is required in emerging economies. The Programme for Infrastructure
Development in Africa estimates that $93 billion is needed annually in capital investment
and maintenance until 2020. Currently, there is a shortfall of $48 billion. PPPs have been
identified as one possible solution (WEF, 2014: 32).

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Partnering with the private sector could: extend services into poorer or informal
communities, provide safer work places, promote adoption of non-discriminatory
employment policies, help the poor access credit, and boost investment in low-cost
housing. Examples such as the slum networking project in Ahmedabad and the
privatisation of Manila’s water authority highlight that partnerships among urban
stakeholders need to be based on a thorough understanding of community needs and
pursued in tandem with other initiatives. In both contexts, the private sector actively
sought out partnerships with residents of informal settlements, NGOs and municipal
government. These collaborative ventures involved information, education and
community campaigns to ensure that residents of informal settlements were involved and
had some ownership of programmes. They also sought to provide assistance to the
poorest families through the provision of micro-finance (Franceys & Wietz, 2003).

The requirements for successful partnerships include a buoyant private sector alongside a
capable and authoritative local government motivated by a common economic interest
(Devas et al., 2004). Policymakers need a clear vision of PPP objectives and a sound
understanding of the local context to appreciate advantages and limitations (Phang, 2009).
A thorough analysis of the long-term development objectives and risk allocation is
essential.

However, in many regions the legal frameworks dealing with tendering, contracts and
oversight are weak or unimplemented, and this lack of clarity discourages domestic and
foreign business investment. At the same time, PPPs have proved complex to implement,
involving pre-feasibility studies and requiring high technical expertise and negotiation
capacities (UN-Habitat, 2016). National and local governments often lack the information
and expertise necessary to negotiate on an equal footing with companies that have
extensive experience in public service delivery.

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 Importance
Public Enterprises

Public enterprises are playing an important role in the economic development of

developing countries. They are involved in various sectors of economy. They play an
active role in fulfilling the needs of people

The importance of public enterprises is become clear from the following points.

1. Planned Development

Most developing countries have five years development plans for economic
development. Public enterprises are given specific roles and targets in such plans.
Public sector programs are also implemented by public enterprises. They are
important for planned development of the country.

2. Infrastructure Development

Infrastructure consists of transport, communication, power, irrigation, drinking

water and buildings. They require huge investment and long period is required to
complete them. Private sector is not interested in such investment. Public enterprises
are important to build infrastructure in the country.

Also Read: Characteristics Of Public Enterprises

3. Basic and heavy industries development

Iron and steel, electricity, cement, fertilizer, petroleum and telecommunication are
examples of basic and heavy industries. They are essential for industrialization of the
country. Private sector lacks resources and interest to invest in such industries.
Public enterprises are important for the establishment of basic and heavy
industries. Defense production is generally done by public enterprises.

4. Public utilities concerns

Public utilities consists of services. They can be water supply, electricity, oil and gas,
railways, airlines, public transport and telecommunications. They are essential for
public welfare. Government has responsibility to provide such services at reasonable
price. Public enterprises are important to provide public utility services at low cost.

Also Read: Types Of Public Enterprises

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5. Balanced development

Government requires balanced development in all regions of the country. Private

sector is not attracted to less developed regions because of low economic gain. Public
enterprises are important for industrial development of backward regions.

6. Employment creation

Government has responsibility to create employment opportunities in the country.

Private sector is not interested to create employment at the cost of profit. Public
enterprises are important to generate employment opportunities in the country.
Their size is big and employee need is also big. They safeguard interests of
employees.

7. Government revenue

Public enterprises are important source of government revenue. They pay various
types of taxes, such as customs duties, value added tax, excise duty, income tax and
others. Such taxes are important in government revenue. Profit generated by public
enterprises can be used to fund development programs.

Also Read: Concept And Meaning Of Public Enterprises

8. Economic growth

Public enterprises are the drivers of economic growth in the country. They develop
infrastructure facilities and operate public utilities. They use modern technology for
production purposes. All these aspects help in acceleration of economic growth in the
country.

9. Social welfare

Public enterprises provide essential goods and services at reasonable price. They also
supply essential commodities such as fertilizer and food grains at subsidized price.
They check price rise of essential goods by regular supply. This promotes social
welfare in the country.

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Private Enterprises
The importance of private sector in Indian economy over the last 15 years has
been tremendous. The opening up of Indian economy has led to free inflow of foreign
direct investment (FDI) along with modern cutting edge technology, which increased
the importance of private sector in Indian economy considerably.

Previously, the Indian market were ruled by the government enterprises but the scene in
Indian market changed as soon as the markets were opened for investments. This saw the
rise of the Indian private sector companies, which prioritized customer's need and speedy
service. This further fueled competition amongst same industry players and even in
government organizations.

The post 1990 era witnessed total investment in favor of Indian private sector. The
investment quantum grew from 56% in the first half of 1990 to 71 % in the second half of
1990. This trend of investment continued for over a considerable period of time. These
investments were especially made in sector like financial services, transport and social
services.

The late 1990s and the period thereafter witnessed investments in sector like manufacturing,
infrastructure, agriculture products and most importantly in Information technology and
telecommunication. The present trend shows a marked increase in investment in areas
covering pharmaceutical, biotechnology, semiconductor, contract research and product
research and development.

The importance of private sector in Indian economy has been very commendable in
generating employment and thus eliminating poverty. Further, it also effected the
following -

 Increased quality of life

 Increased access to essential items
 Increased production opportunities
 Lowered prices of essential items
 Increased value of human capital
 Improved social life of the middle class Indian
 Decreased the percentage of people living below the poverty line in India
 Changed the age old perception of poor agriculture based country to a rising
manufacturing based country
 Effected increased research and development activity and spending
 Effected better higher education facilities especially in technical fields
 Ensured fair competition amongst market players
 Dissolved the concept of monopoly and thus neutralized market manipulation
practices

The importance of private sector in Indian economy can be witnessed from the
tremendous growth of Indian BPOs, Indian software companies, Indian private
banks and financial service companies. The manufacturing industry of India is
flooded with private Indian companies and in fact they dominate the said industry.

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Manufacturing companies covering sectors like automobile, chemicals, textiles, agri-
foods, computer hardware, petrochemical products were the main driver of growth.

The Indian BPO sector is more concentrated with rendering services to overseas
clients. The KPO sector is engaged in delivering knowledge based high-end services
to clients. It is estimated, that out of the total US $ 15 billion KPO service business
around US $ 12 billion of business would be outsourced to India by the end of 2010.

As of the last decade, the growth and investment in the private sector has well
surpassed the growth in the public sector. Figures suggest that the share of the
private sector in the net sales of manufacturing and services industry augmented
from 48.83% in 2001-01 to 68.55% in 2009-10. Subsequently the share of the public
sector reached to 31.45% from a higher percentage of 51.17%.The shares of private
sector in the net profit in the non-agricultural economy rose to 63.86% from 39.17%.
The share of the public sector subsequently declined to 36.14% from 60.83%.

This increase in the private sector's share is largely due to the higher foreign direct
investment over the last decade. Over the last decade or so, with the liberalisation of
the economic policies, India has been able to achieve higher investment from the
private sector. For instance due to modifications and changes in the economic
policies the transport and telecommunication industry witnesses a higher percentage
of growth and investment in the private sector.

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 Types and Functions

Public Enterprises

The forms of public enterprises are:

1. Departmental Organisation.

2. Board Management.

3. Statutory or Public Corporation.

4. Government Company.

Public Enterprises Form # 1. Departmental Organisation:

Under departmental management, a public undertaking is run as a department of the

government.

The traditional enterprises such as the post and telegraphs, broadcasting, munitions
factories etc. are managed as departments of the govt.

The overall responsibility for management rests with the ministry concerned, e.g.
Ministry of Posts and Telegraphs, Ministry of Broadcasting.

This type of enterprise is financed through annual budget appropriates made by

legislatures and its revenues are paid into the treasury. Departmental enterprises are
subject to budget accounting and auditing controls applicable to all govt.
departments.

Departmentally administered enterprises possess a permanent staff of civil servants

whose method of recruitment and conditions of service are the same as for other civil
servants. If public is not satisfied with the working of such enterprise, the matter can
be raised in Parliament because they are within the control of the Parliament.

The Study Team on Public Sector Undertakings has mentioned the

following principal characteristics of Departmental Undertaking:

1. It is financed by annual appropriations from the treasury and all, or a major share,
of its revenues are paid into the treasury.

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2. It is subject to the budget, accounting and audit controls applicable to govt.
activities.

3. Its permanent staff consists of civil servants and their conditions of recruitment
and service are the same as for other civil servants and

4. It can be sued only by following the procedure prescribed for filing suits against
the government.

Merits of Departmental Organisation:

1. Secrecy:

The departmental undertaking is directly subordinate to a Ministry. The need for se-
crecy, strategic importance and similar conditions make the departmental form the
most suitable form of organisation in certain areas (for defence industry).

2. Complete Accountability:

The accountability of departmental undertakings to Parliament is complete, their

management being under the Ministry concerned, or it assures the maximum degree
of control by politically responsible officials.

3. Absolute Govt. Control:

It provides a means of securing absolute govt. control.

4. Instrument of Social Policy:

The state can make use of these undertakings as instruments of its economic and
social policy.

5. Direct Criticism is Parliament:

From the public point of view the departmental organisation has an advantage that if
anything goes wrong or if the public is dissatisfied with the working of an
undertaking the matter can be immediately raised in Parliament.

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Disadvantages of Departmental Organsiation:

1. No Business-Like Functioning:

The basic weakness of department management is that such enterprises cannot be

run in business-like fashion. Control by legislature makes it subject to political
changes and consequently it becomes difficult to formulate long-range business
plans. Moreover, officials are afraid of taking initiative and risks for fear of being
criticised in the Parliament. Some amount of freedom has been introduced in the
case of railways by arranging a separate executive board.

2. Red-Tapeism:

Govt. departments are noted for red-tapeism and procrastination and cannot be
sensitive to consumer demand. Govt. officials generally do not have necessary
management training which is essential for running industries.

3. No Separate Funds for Expansion:

The revenues of the enterprise are merged with the general revenues of the govt. and
are not generally used for the expansion of the business.

4. Political Influence:

The departmentally- managed undertakings are under the control of ministers and
the political parties to which they belong and who hardly understand the problems of
management of industry. Moreover, their policies suffer from instability because of
the uncertainty attached to the tenure of political parties and ministers.

5. Delay in Decision-Making:

Govt. officials who are asked to manage public undertakings generally lack business
acumen. They are selected and trained generally for a purpose quite different from,
running industries and services. They are used to working under a rigid system of set
rules and for every decision they look for a precedent. This causes delay in decision-
making which is harmful for business enterprise.

6. No Long-Term Policy:

Frequent transfers of officers make it difficult to follow a long-term policy on the part
of the business enterprise.

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Private Enterprises

A broad variety of different businesses, company structures, and industries exist

within the private sector in the United States. The private sector is a broad concept
encompassing profit-seeking companies that produce products and offer services,
invest capital, and undertake a variety of different activities in pursuit of profit.
These companies range in size from small businesses with the owner as the sole
employee, to multinational corporations with millions of employees and contractors.
The private sector represents the creative work of any employee or business owner
making a profit or pursuing a profit.

Primarily, private sector activities may be divided into production and services.
Companies that produce products do so with the intent of selling these products at a
profit to organizations or individuals. The companies that do not produce products
themselves likely offer services for sale with the intent of making profits for their
efforts.

Key Takeaways

 In the United States, the private sector is made up of a variety of profit-

seeking businesses providing products and services.
 Sole proprietors are small businesses owned by one individual who is
responsible for all debts and liabilities the business incurs.
 Partnerships have multiple owners who divide the responsibilities, profits,
and obligations according to an agreement among the partners.
 Limited liability companies (LLCs) and corporations protect owner assets
from liability by creating a unique entity without direct ties to individuals.

Sole Proprietors

Private sector businesses are organized in different ways to provide tax benefits to
the owners, minimize liability, and improve operational efficiency. The most
common organizational structures are sole proprietors, partnerships, limited liability
companies, and corporations.

Sole proprietors are mostly small businesses and are the easiest way to organize a
company in the U.S. These companies are owned by one individual and have a
financial structure that essentially makes the owner and the company itself the same
person for legal purposes.

30.2 million -

Number of small businesses in the United States according to the U.S. Small
Business Administration.

The owner is completely responsible for all debts and liabilities the company
assumes. Lenders may pursue payment from this individual if the company defaults
on a loan and legal action may be taken against the owner directly for anything illegal
the company does.

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Partnerships

Partnerships are similar to sole proprietors but have multiple owners that divide the
responsibilities and profits amongst themselves according to an arrangement among
the partners. These terms pose a disadvantage to larger companies, which may be
sued often and take on substantial loans and obligations as a normal part of daily
business operations. For these reasons, larger companies usually decide to organize
differently in order to protect the owners.

Limited Liability Companies (LLC) and Corporations

Limited liability companies (LLC) and corporations are common organizational

structures that protect owner assets and address liability concerns by, in essence,
creating the company as a unique entity without direct ties to individuals. This
means all responsibility rests with the company itself for any event or occurrence
within the course of normal business practice. These structures make it much more
difficult to pursue the individual owners for payment of debts or for legal liability.
These companies are taxed differently from sole proprietors and partnerships and
have many important legal differences.

The Bottom Line

Under one of these organizational structures, most companies are governed by

specific internal bylaws and policies set by the owners or governing board. Private
companies are free to choose their own legal means of seeking profit, advertising
their product or services, and conducting normal business activities with limited
government involvement.

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16
 Comparison

Differences between Public and Private Enterprise:

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.

Public Enterprises

 These are established with the objective of rendering service to the people.
 It minimizes concentration of wealth in the hands of few persons.
 These are formed with social interest.
 it prevents regional imbalanced growth of industries.
 It is free from exploitation motive and as such the consumers and the
employees are given a fair dealings.
 There is no shortage of capital to undertake risky and costly projects.
 It undertakes all sorts of industries irrespective of its nature.
 It can be operated on large scale and can attain gigantic size.
 Public sector ensures that workers get the full value of their efforts, and
consumers get full value of the price paid.
 Public sector causes the equal distribution of wealth in the State. It does not
allow to concentrate huge wealth in few hands of rich people.
 The surplus money/profit accrued can be invested for the social welfare
activities and better services.
 Public sector cares environment, people, employees, neighbours, etc. Its
objectives are multi-faceted.
 Such type of wastages is not adopted in public sector.
 The objective of reduction of disparities in income and wealth can be achieved
through public sector. It is an instrument of equal distribution of wealth.

17
Private Enterprises

 These are established with the predominant objective of earning profit.

 It lends to concentration of wealth in the hands of few persons.
 These are formed with personal interest.
 It develops regional imbalances in the growth of industries.
 It is not free from exploitation motive and the consumers and the employees
are not given a fair dealings.
 It feels insufficiency of capital to undertake risky and costly projects.
 It undertake those consumer goods industries where profit earning scope is
high.
 Private sector is based on exploitation of workers and consumers.

 Private sector causes the concentration of huge wealth in few hands of rich
people. The majority of poor will suffer.
 The surplus money/profit accrued goes into the pockets of industrialists.
 Private sector does not care environment, people, employees, neighbors. Its
sole motto is to accrue huge profits.
 In private sector, unnecessary consumable items are produced, which are
criminal waste to the society. Further there will be multi- brands for each
product.
 It is not at all possible in private sector. It is an instrument of accumulation of
wealth
 The private sector does not care the socially backward class people. It does not
provide employment opportunities to them. Reservations cannot be applied in
private sector.
 Private sector seeks the ways of getting profit only. If transportation is in the
hands of private, it does not run the buses in the routes which are not
profitable. Private sector does not open banks in rural areas. Majority of the
doctors do not like to practice in rural areas.
 The private sector expresses meager willingness to take the risk in new and
untried areas such as oil exploration.
 Private sector cannot procure such huge investments for the said fields. Even
it can procure the investment; it cannot wait for longer periods for getting
profits.

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Comparison Chart:

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Private enterprise is what is meant by industriousness that is directed towards
earning profits. Enterprise class is a phrase that has become common these days, and
it refers to a solution or a device meant for use in a large organization. Whereas,
Public enterprise, a business organization wholly or partly owned by the state and
controlled through a public authority. Some public enterprises are placed under
public ownership because, for social reasons, it is thought the service or product
should be provided by a state monopoly.
From the above discussion we can conclude that public enterprise are those
enterprise which have significant influence and ownership of government. Public
enterprise are essential for nations growth and prosperity. However, with the global
trend towards liberalization, it is advocated that there should be less amount of
government enterprise and private sectors shall be encouraged to undertake part on
all key economic activities of nation.

However, in many regions the legal frameworks dealing with tendering, contracts and
oversight are weak or unimplemented, and this lack of clarity discourages domestic and
foreign business investment. At the same time, PPPs have proved complex to implement,
involving pre-feasibility studies and requiring high technical expertise and negotiation
capacities (UN-Habitat, 2016). National and local governments often lack the information
and expertise necessary to negotiate on an equal footing with companies that have
extensive experience in public service delivery.

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