Economic activities can be classified into public and private sectors on the basis of who owns assets and is responsible for the delivery of services.

In the private sector, ownership of assets and delivery of services is in the hands of private individuals or companies. The activities in this sector are guided by the motive to earn profits. For example, companies like Tata Iron and Steel Company Limited (TISCO) or Reliance Industries Limited (RIL) are privately owned. In my area, private schools and hospitals operate to earn profits, and we have to pay money to access their services.

In the public sector, the government owns most of the assets and provides all the services. The purpose of the public sector is not just to earn profits. Governments raise money through taxes and other ways to meet expenses. For example, Railways and post office are part of the public sector. In my area, government schools and public hospitals provide services at reasonable costs.

The key difference is that the private sector focuses on profit-making, while the public sector provides services needed by society as a whole which the private sector will not provide at a reasonable cost. Some activities require spending large sums of money, which is beyond the capacity of the private sector. The government takes up these activities to ensure public welfare.