I have worked in tier one government financial institution as a Class I officer for close to 10 years and later 9 years in US MNCs, so qualify to take a shot at this question. There are a few very basic things that will not change in government jobs very soon.

1) Government jobs are not there to make profits, they have an equally important goal to generate employment, so these jobs are not designed to get the best out of you. advocates Mediocrity, not Excellence.
2)Reward for the Performance – It is unheard of in government departments so no motivation for work.
3)Most of the policy decisions are taken by concerned ministries largely controlled by IAS officers influenced by politicians, big corporates, circumstances, international pressure, and what not… It takes a fairly large amount of time to understand government functioning and how decisions are made and by the time you realize this, it is too late and there is no exit path.

The problem is if you work in government for a long time, say till you hit 40, no one from the private sector will touch you because you have gained a different kind of experience which is not useful in profit-centric private organizations. And if you start disliking the fact of not being used to the fullest you are stuck there.

My sincere advice is to stay away from a government job if you have some fire in your belly and wish to achieve something beyond Mediocrity. The fear of losing a job will go away as you spend a few years in the corporate sector and save some money.