India follows a mixed economy where both the government and private players run businesses. The public sector is owned and managed by the government, while the private sector is owned by individuals and companies. Both sectors together shape production, jobs and growth.
Public Sector
Public sector enterprises are owned, controlled and managed by the central or state government. They were expanded after independence to build heavy industries and infrastructure. Examples include SAIL, ONGC, BHEL, Indian Railways and LIC.
- Aim is public welfare, not only profit.
- They cover key areas like steel, oil, power and defence.
- Often called Public Sector Undertakings (PSUs).
Private Sector
The private sector is owned by private individuals or firms and works mainly for profit. It includes companies like Reliance, Tata, Infosys and Wipro. After the 1991 economic reforms, the private sector grew rapidly due to liberalisation.
Classification of Central PSUs
Profitable central PSUs are given special status based on their performance and financial strength:
- Maharatna – highest category, can invest up to Rs 5,000 crore. Examples: ONGC, SAIL, NTPC, IOCL.
- Navratna – can invest up to Rs 1,000 crore. Examples: BEL, NMDC.
- Miniratna – smaller PSUs with limited financial powers.
Disinvestment
Disinvestment means the government sells part of its shares in a PSU. It is done to raise funds and improve efficiency. DIPAM (Department of Investment and Public Asset Management) handles disinvestment in India.
Public vs Private Sector
- Ownership: government vs private individuals.
- Motive: welfare vs profit.
- Decision-making: slow vs fast.
- Capital: from government budget vs from private investors.
Quick Revision Points
- India has a mixed economy.
- Public sector owned by government; private sector by individuals.
- Maharatna is the highest PSU category.
- ONGC, SAIL, NTPC, IOCL are Maharatna companies.
- Private sector grew after the 1991 reforms.
- DIPAM manages disinvestment.
- PSUs also called Public Sector Undertakings.
- Navratna firms can invest up to Rs 1,000 crore.