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EDUindex News

PUBLIC SECTOR ENTERPRISES

The enterprises or companies owned and handled by the government are the public sector enterprises. These may be held by the state or the central government. Most of the times, the aim of such enterprises is the public welfare. They participate and contribute in the economic activities to for the growth of the country. Their second motive is to earn as much profit as they can from these activities. Some of the biggest public sector enterprises in India are Indian Oil Corporation (IOC), Hindustan Machine Tools Ltd. (HMT) and Life Insurance Corporation of India (LIC). Although, not all these enterprises are the same just because they come under the public sector. There are three forms of such enterprises.

 

DEPARTMENTAL UNDERTAKINGS

This is the most ancient type of public sector enterprise. These are the departments through which the government functions and their activities are the most crucial part of it.

These types of enterprises are suitable where the complete control of the government is necessary with the supreme secrecy for all the information. Also, in these a large of amount heavy investment is required and the economic control is mandatory which can be only done by the government.

Some of the advantages of these enterprises are that there is effective control over the operations being executed since all the power lies within the hands of one authority. Also, there is high degree of public answerability which means that the public is aware of almost every step undertaken by them.

Although the disadvantages of these enterprises are that there are no immediate decisions made since for every action, a written permission must be received by the concerned authorities which takes a long time. Also, because of this long procedure, they can’t take the full advantage of the opportunities available to them.

 

STATUTORY CORPORATION

These are a special type of enterprises which is brought into existence only by the parliament. They decide the powers, rules, regulations, operations and activities as well as its relationship with the government. These enterprises require a large amount of capital investment and must be run as a business along with keeping in mind about the public welfare. Some examples of such enterprises are Air India, Indian Airlines, Reserve Bank of India (RBI) and Industrial Development Bank of India (IDBI).

The merits of such organizations are that they have a lot of flexibility since they do not necessarily have government interference in their operations as well as financial matters. Also, they are highly important for the economic development since they have the power of government along with the features of a private organization.

However, some downsides are that since it has the responsibility to run as a business, they may lose themselves into some anti-social actions such charging really high prices from the public. Also, they do not usually have to face any competition from anyone therefore, they might slack behind sometimes and turn out to be inefficient.

 

GOVERNMENT COMPANY

Any company whose majority of the shares, that is at least 51%, are held by a state or the central government then it is declared a government company according to the Indian Companies Act, 2013. These types of companies suitable when the government wants to control an organization in the private sector with the aim of public welfare. Some examples of such companies in India are Bharat Heavy Electrics Ltd. (BHEL), Steel Authority of India (SAIL) and Hindustan Aircrafts.

The main merits of such organizations would be that there is no requirement of a written permission by the parliament since it is formed under the Companies Act, 2013. Also, they have complete power over the management of the company since there is no government interference.

But they are not answerable to the parliament since it is more of a private organization and also the independence factor exists on the paper only. Therefore, the politicians and ministers can interfere if they want to.