Can the public sector companies compete with the private sector in terms of profits and efficiency? Give reasons for your answer

By Harshvardhan, the Subject Matter Expert at Edumarz

Solution: In short, the answer is No. The private sector consists of businesses owned by individuals or a group of individuals and The various forms of organisation are sole proprietorship, partnership, joint Hindu family, cooperative and company.

Reasons are listed below:-

1. public sector companies fail to provide flexibility, which is essential for the smooth operation of the business.
2. The employees or heads of departments of such public sector companies are not allowed to take independent decisions, without the approval of the ministry concerned in departmental undertakings. This leads to delays, in matters where prompt decisions are required;
3. public sector companies are unable to take advantage of business opportunities. The bureaucrat’s over-cautious and conservative approval does not allow them to take risky ventures
4. In public sector companies, there is red-tapism in day-to-day operations and no action can be taken unless it goes through the proper channels of authority;
5. There is a lot of political interference through the ministry in Departmental Undertakings
6. public sector companies are usually insensitive to consumer needs and do not provide adequate services to them.