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Public vs Private Sector Performance in India

The document analyzes comparative performance data between 1990-2000 for public and private sectors in India. It finds: 1) The public sector, on average, performed better than the private sector in terms of income growth. Specifically, core central government public sector units grew incomes the best compared to other groups. 2) While total costs grew fastest in the government sector overall, administrative and overhead costs grew faster in the private sector. Production costs increased more slowly in the private sector. 3) Foreign companies and top 50 private sector businesses had higher profit growth than the domestic private or government sectors. However, the government sector outperformed the overall private sector in terms of profits. 4) Core central government public

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Apurva Dutta
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24 views2 pages

Public vs Private Sector Performance in India

The document analyzes comparative performance data between 1990-2000 for public and private sectors in India. It finds: 1) The public sector, on average, performed better than the private sector in terms of income growth. Specifically, core central government public sector units grew incomes the best compared to other groups. 2) While total costs grew fastest in the government sector overall, administrative and overhead costs grew faster in the private sector. Production costs increased more slowly in the private sector. 3) Foreign companies and top 50 private sector businesses had higher profit growth than the domestic private or government sectors. However, the government sector outperformed the overall private sector in terms of profits. 4) Core central government public

Uploaded by

Apurva Dutta
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Comparative performance of the public and private sector in India

Data of business published by the Centre for Monitoring Indian Economy (CMIE) & classified
according to ownership show that there is no difference in the performance of government & the
private sectors. Rather the public sector appears to have done better than the private sectors in
many cases. The government enterprises include the central government, the state government &
the local bodies. While the govt. category would include all kinds of govt. ownership, the
category of central govt. would include the central govt. taken over units & the core public sector
units.

The joint sector and the co-operative sector have been included in the private sector the foreign
companies are the multinational companies. The CMIE has worked out the compound annual
growth rate, of growth (CARG) for income, cost & profit indicators.

Growth in income indicators public sector vs private sector


In terms of income indicators, the govt. sector as a whole has done better than the private sector
or the foreign private sector.

If we look at the disaggregated data then we find that the figures for the central government
taken over organizations or what is the same thing, the erst while sick companies of the private
sector, have continued to show poor income growth.

What is striking in the above data is that the category of central govt. others which are the core
public sector units. From the data presented below, we find that they have done the best in terms
of the growth in the income indicators even when compared to the foreign companies and the top
50 private sector business houses.

Growth in cost indicators : public sector vs private sector


In terms of the cost indicators, of the public sector & the private sector units. from the table
below, we find that in the govt. sector as a whole the growth in the total cost have been the
highest when we compare the data from the core public sector units and the top 50 business
houses we find that the cost have risen faster in the former that in the latter.

But between the growth rate in the total cost that include the administrative and the advertising
cost and the cost of production, we find that in the private sector as a whole total cost have risen
faster than the cost of production this indicates that the administrative and the overheads have
risen more rapidly in the private sector than in the public sector.

In case of raw materials, the central public sector units appear to have done better than the Indian
top 50 business houses. But on the whole, the rise in the cost of raw materials is among the
highest. The private sector units that are not a part of the big business houses and the foreign
companies have done better on the raw materials front possibly due to the fact that they produce
higher value added goods than the central public sector units and the 50 big business houses.

The wages and salaries on the whole have risen faster in the private sector than either in the
MNCs or the govt. sector.

Power and fuel cost have risen the fastest in the central public sector units and the increase is
sharp in contrast to the other ownership categories. This is due to the fact that these units are all
engaged in the production of power intensive and capital intensive goods like steel, oil refinery
& mining.

Growth in profits: public vs private sector


In terms of gross and operating profits, the govt. as a whole has done for better then either the
domestic or the foreign private sector.

Between the latter two, the foreign private sector has done better than the domestic private
sector.

When we come to the net profits we find that the multinationals have done the best followed by
the govt. sector as a whole and than the private.

In term of growth savings though the foreign sector followed by the top 50 business houses seem
to have done better than any other class of ownership the public sector gross savings have not
done well all. The private sector that does not belong to any business house has performed
poorly in gross savings.

We may thus conclude that the central public sector as a whole is a better performer than even
the foreign multinational and the cream of the private sector namely, its business houses.

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