Tuesday, July 30, 2013

Difference between Public and Private Administration

Administration exists in both the public and private institutions as administration is nothing but a co-operative group activity with a common purpose. But the nature of administration depends on the nature of the purpose which is the be achieved by it e.g. Public Administration exists for achieving the 'state purposes' determined by the state while the private administration exists for achieving the business goals of the organization. So on the basis of the institutional settings and nature of administration public and private administration can be distinguished.

Difference between Public and Private Administration

The important distinguishing points between public and private administrations are following:


One of the most distinguishing features of public administration is that it is directed by the political executive of the country. Public administration exists for implementing the public policies. Private administration on the other hand is non-political in nature but in times of emergencies it can be directed by the political executive.



The primary purpose of public administration is to promote "human welfare" and "social good". Towards this end it provides some goods and services to the society. Profit earning is not the motive of public administration while it is the guiding factor in case of private administration. Though public administrator cannot be totally oblivious of profit earning factor but still the benchmark of judging whether the decisions of administrators are right or wrong is the public welfare and not profit motive. For example, in times of crises such as tackling train accidents, earthquakes, law & order problems etc. the "effectiveness' of the decision of the public administrators is counted and not the profitability. In contrast, in private sector whether a decision should be taken or not is determined by the "profit earning potential".



There is a great deal of difference when the jobs in public and private sectors are compared on the basis of social prestige associated with them especially in case of developing countries. Those in public sector enjoy higher status and prestige in society in the developing countries however this is not the case in developed countries like USA where jobs in private sector enjoy higher prestige.



The decisions taken by the public administrators are centers of attraction in the society. The public watches even their minute decisions. This is not the case in case of private administrators. It is so because the activities of public administration affect the lives of the most of the people.



In public sector, often a deficit budget is prepared. This is so because the expenditure of government exceeds its income. This is not the case in private sector as private organizations cannot survive without profit.



Public Administration functions within a legal framework. It is rule bound. Constitutional practices, laws and regulations decide the ambit of operation of the public functionaries. Public Administration can never bypass the rule of law otherwise they could be punished. Though private administration also functions within the confines of laws such as Companies Act, 1956; Income Tax Act etc. still it is not constrained by law as is the Public Administration.



Public Administrators cannot practice any form of discrimination of while dealing with their client i.e. the people. All sections of the society are to be dealt with on equal footing. If any form of discrimination is found then it is very serious allegation against the administrators. However in private administration, giving preferential treatment to certain clients is considered to be a common business practice.



Public Administration is accountable to the people i.e. to the public at large though his accountability is not direct but through the legislature, judiciary and the executive etc. This public accountability is unique to the public institutions. Every action of a minister or public servants is subject to close scrutiny by the representatives of the people. Any departure from a standard norm can cause lot of embarrassment to the government. This is not the case in private administration. Private administrators can take decisions in the interests of the organization without being answerable to the public.



Public Administration operates on quite large scale. It is commonly said that almost everything under the sun is covered by public administration. It is any means larger than any of the big enterprises in terms of the complexity, size and the diversity of operations.



Some of the activities of the government are monopolistic in nature i.e. there is no substitute for them e.g. national security, law & order, mint & currency and foreign relations etc. Private parties do not compete for providing these services. These activities are "sovereign" in nature and constitute the very basis for the voluntary organizations. This monopolization of some services is unique in case of public administration only. No such parallel exists in private administration. Rather public administration prevents any tendency on the part of the private sector to monopolies in their areas of operation.



In Public Administration, whatever is done is done in the name of the government and the head of the state. The officials of the government remain anonymous i.e. their identity is not disclosed and they do not do anything in their own name. This is not the case in private administration where responsibilities are fixed on individuals and they are answerable to the organization in case of any lacunae.



Public Administration in itself does not control the budget which it has to spend in course of its operations. It is always subjected to the external financial control. Legislature authorizes the funds to be spent by the executive. Even after the funds are earmarked by the legislature to be spent by the executive, lot of financial scrutinizes take place by legislature and its agencies of audit etc. to see whether money is being spent according to the intended plans. For spending money on some other heads different from the original heads, it has to again go back to the legislature to seek its permission. This is not the case in case of private administration. The higher level managers in private administration are given powers to spend money according to the business plans of the organization and board of management controls the operations as well as the finance of the private organizations.



Due to the complex nature of the activities, demands of public accountability, lack of financial & personnel powers, job security to the employees and hierarchical structure etc. the level of efficiency in case of public administration is far less than the private organizations. The objective of private organizations is clear and that is to earn profit. However the public organizations exist for a large number of reasons. Even the public sector enterprises which exist for earning profits for the government have social welfare as one of their objectives. In such a scenario public administration has lower efficiency than the private ones. Further, it is debatable whether "efficiency" should be taken as a benchmark for measuring the performance of public administration. Their performance depends on "effectiveness" and not efficiency.



Many services provided by the public sector are often provided just for the sake of services and nothing else e.g. transport services are often subsidized by the government. Many of the state transport corporations are running into severe losses still governments do not wish to do away with them because they provide means of commutation for poor people. Such a thing cannot be imagined in case of private administration which exists for profit making.



Public Administrators need to be guided by some moral and legal obligations while dealing with others. Any deviations from these obligations are seen by suspicion by the public. A public administrator has not only to act according to the laws, rules and regulations but should also appear to be doing so before the public. Government cannot advertise its services the way private administration advertises its services. There is no such restriction in the functioning of the private administration.



The natures of the activities provided by public administration are such that they have a sense of urgency. For example, law & order, defense, health & medical care and infrastructure facilities like electricity, railways etc. These services cannot be neglected by the public administrators for a long time. However there is no such urgency in case of private administration. If business organizations decide that introducing a product at some later date would give far more benefit to the organization then there would be nothing to restrict them even if it is against public interest.


Some famous writers have also written about distinctions in public and private administrations in their work e.g. Simon has made the following distinction between the two:

  • Public Administration is bureaucratic while private administration is business like

  • Public Administration is political whereas private administration is non-political

  • Public Administration is characterized by red tape whereas private administration is free from it.


According to Sir Josiah Stamp, following four principles differentiate public from private administration:

  • Principle of uniformity - Common & uniform laws regulate public administration.

  • Principle of external financial control - The legislature controls the finances or public administration.

  • Principle of Ministerial Responsibility - Public Administration is accountable to the political executive.

  • Principle of profit motive - Public Administration is accountable to the political executive.


According to Paul Appleby, "breadth of scope, impact and consideration"; "public accountability" and "political character" are the three distinguishing features which differentiate public administration from private administration.


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