Private, Public and Global Enterprises

The private sector consists of business organisations owned by individuals or a group of individuals. Its forms include sole proprietorship, partnership, joint Hindu family, cooperative and company.

The public sector consists of organisations owned and managed by the government. These may be partly or wholly owned by the Central or State Government. Some are also created by a Special Act of Parliament and participate in the economic activities of the country.

The various types of organisations in the private sector are:

- Sole proprietorship
- Partnership
- Joint Hindu family
- Cooperative
- Company

The different kinds of organisations under the public sector are:

- Departmental undertakings
- Statutory corporations
- Government companies

Some examples of public sector enterprises and their classification are:

- Railways — Departmental undertaking
- Post and Telegraph Department — Departmental undertaking
- Life Insurance Corporation of India (LIC) — Statutory corporation
- Airports Authority of India — Statutory corporation
- Steel Authority of India Limited (SAIL) — Government company
- Bharat Heavy Electricals Limited (BHEL) — Government company

The government company form is preferred because:

- it can be established by fulfilling the requirements of the Companies Act; no separate Act of Parliament is needed;
- it has a separate legal entity apart from the Government;
- it enjoys autonomy in management decisions and can act according to business prudence;
- it can provide goods and services at reasonable prices and help control the market and curb unhealthy business practices.

The government maintains regional balance by developing all regions and states in a balanced way and removing regional disparities. It does this by:

- setting up public sector industries in backward areas;
- giving special attention to lagging regions in the Five Year Plans;
- locating new enterprises in underdeveloped areas;
- preventing the growth of private sector units only in already advanced areas.

For example, major steel plants were set up in backward regions to promote employment and industrial development.

Public Private Partnership (PPP) is a relationship between public and private entities for the purpose of infrastructure and other services. Under PPP, tasks, obligations and risks are shared in an optimal manner. The public partner is usually a government body, and the private partner may be a local or foreign business or investor with relevant technical or financial expertise.