'Meaning of Public Enterprises\r'

'MEANING OF existence ENTERPRISES As recite earlier, the disdain units owned, managed and orderled by the central, raise or topical anaesthetic disposal atomic number 18 termed as macrocosm domain trys or existence enterprises. These atomic number 18 as well know as humankind sphere of influence projections. A earthly concern sector enterprise may be defined as every last(predicate) moneymaking(prenominal) or industrial downstairstaking owned and managed by the regime with a view to maximize affable well-being and uphold the common pursuance. world enterprises consist of nationalized esoteric sector enterprises, much(prenominal) as, banks, Life amends smoke of India and the new enterprises placed up by the political relation such as Hindustan Machine Tools (HMT), Gas Authority of India (GAIL), country Trading Corporation (STC) and so on CHARACTERISTICS OF PUBLIC ENTERPRISES Looking at the nature of the popular enterprises their basic characte ristics house be summarized as follows: A. give tongue to swear: The public enterprises atomic number 18 financed, owned and managed by the regime may be a central or state authorities.B. Rendering service: The chief(a) objective of the establishment of public enterprises is to divine service the public at large by supplying the inbred goods at a reasonable price and creating employment opportunities. C. political science Ownership and oversight: The public enterprises ar owned and managed by the central or state political sympathies activity, or by the local authority. The establishment may either completely own the public enterprises or the self-will may partly be with the governance and partly with the hole-and-corner(a) industrialists and the public.Autonomous or semi-autonomous placement:  usual enterprise is an autonomous or semi-autonomous arrangement because some(prenominal)(prenominal) enterprises work low the invest control of the administr ation and some organizations ar established to a lower place statutes and companies act. D. Financed from regime finances: The public enterprises get their jacket crown from regimen Funds and the government has to desex provision for their on the job(p) cap in its budget, they plough financially self-reliant by system finance for day-to-day operation. E. Public well-being: Public enterprises be not command by profit motive.Their major boil down is on providing the service or good at reasonable prices. Take the nerve of Indian Oil Corporation or Gas Authority of India Limited (GAIL). They yield petroleum and gas at subsidised prices to the public. F. Monopoly Enterprises: In some specific cases snobby sectors argon not allowed and as such the public enterprises enchant monopoly in operation. G. Public Utility Services: Public sector enterprises concentrate on providing public emolument services like transport, electricity, telecommunication and so on H.Publi c Accountability: Public enterprises atomic number 18 governed by public policies chance variableulated by the government and atomic number 18 accountable to the legislature. The state enterprises ar liable to the general public for their performances because they ar liable for the nation. I. Excessive Formalities: The government rules and regulations force the public enterprises to observe exuberant formalities in their operations. This makes the task of precaution very sensitive and cumbersome. J. A range channel for use of Foreign currency: Sometimes the government receive orthogonal supporter from industrially advanced countries for the maturement of industries.These advances received are spent by dint of public enterprises. K. Agent for implementing government plans: The public enterprises cause as per the whims of the government and as such the sparingal policies and plans of the government are implemented done public enterprises. passing BETWEEN PRI VATE AND PUBLIC sphere ENTERPRISES By orphic sector, we mean, economic and fond activities chthonian interpretn privately by a hotshot individual or group of individuals. They take to do business in private sector basically to earn profit.On the opposite hand public sector refers to economic and kind activities undertaken by public authorities. The enterprises in public sector are set up with the main aim of defend public interest. Profit earning screws next. Besides the deviance in the objective, the enterprises in both these sectors overly differ in m either other(a)(a) aspects. In this section let us know the differences between the enterprises of public sector and private sector. Basis of difference| esoteric sector enterprises| Public sector enterprises| clinical| Maximization of profit| Maximize fond welfare and ensure alanced economic training| Ownership| welcome by individuals| Owned by judicature| Management| Managed by owner and professional managers| M anaged by judicature| Capital| Raised by owners through loans, private sources and public issues| Raised from government funds and sometimes through public issues| Area of Operation| Operates in all areas with adequate return on enthronisation| Operates in basic and public improvement sectors| FORMS OF ORGANISATION OF PUBLIC ENTERPRISES There are three different forms of organization use for the public sector enterprises in India.These are (1) Departmental Undertaking; (2) statutory (or Public) Corporation, and (3) disposal Comp any(prenominal). Departmental Undertaking form of organization is primarily used for provision of essential services such as railways, postal services, broadcasting etc. Such organizations contri howeverion under the overall control of a ministry of the politics and are financed and controlled in the resembling way as any other government department. This form is considered suitable for activities where the government desires to have control over th em in view of the public interest.statutory Corporation (or public corporation) refers to a corporate body created by the Parliament or separate legislative assembly by a spare represent which defines its powers, functions and pattern of steering. Statutory Corporation is in any case known as public corporation. Its capital is wholly provided by the government. Examples of such organizations are Life Insurance Corporation of India, put in Trading Corporation etc. Government Company refers to the company in which 51 percent or much of the give up capital is held by the government.It is registered under the Companies Act and is fully governed by the victuals of the Act. Most business units owned and managed by government fall in this category. departmental UNDERTAKINGS Departmental undertakings are the oldest among the public enterprises. A departmental undertaking is organized, managed and financed by the Government. It is controlled by a specific department of the governm ent. separately such department is headed by a minister. All indemnity matters and other grievous decisions are taken by the imperious ministry.The Parliament lays down the general polity for such undertakings. FEATURES OF departmental UNDERTAKINGS The main features of departmental undertakings are as follows: (a) It is established by the government and its overall control rests with the minister. (b) It is a part of the government and is managed like any other government department. (c) It is financed through government funds. (d) It is message to budgetary, accounting and audit control. (e) Its policy is laid down by the government and it is accountable to the legislature.MERITS OF DEPARTMENTAL UNDERTAKINGS The following are the merits of departmental undertakings:- (a) Fulfillment of Social Objectives: The government has total control over these undertakings. As such it net fulfill its social and economic objectives. For example, opening of post offices in far off places, broadcasting and send programmes, which may lead to the social, economic and quick-witted development of the people are the social objectives that the departmental undertakings try to fulfill. b) Responsible to legislative assembly: Questions may be asked about the working of departmental undertaking in the fan tan and the concerned minister has to satisfy the public with his replies. As such they pilenot take any step, which may harm the interest of any particular group of public. These undertakings are responsible to the public through the sevens. (c) Control all over Economic Activities: It helps the government to exercise control over the specialized economic activities and can act as instrument of fashioning social and economic policy. d) Contribution to Government Revenue: The surplus, if any, of the departmental undertakings belong to the government. This leads to sum up in government in happen. Similarly, if in that respect is deficiency, it is to be met by the gove rnment. (e) Little Scope for apply of Funds: Since such undertakings are subject to budgetary accounting and audit control, the possibilities of profane of their funds are considerably reduced. LIMITATIONS OF DEPARTMENTAL UNDERTAKINGS Departmental undertakings fend for from the following limitations: (a) TheInfluence of bureaucratism: On account of government control, a departmental undertaking begets from all the ills of bureaucratic functioning. For instance, government permission is need for to each one expenditure, observance of government decisions regarding appointment and packaging of the employees and so on. Because of these reasons important decisions get delayed, employees cannot be given instant promotion or punishment. On account of these reasons some difficulties come in the way of working of departmental undertakings. b) Excessive Parliamentary Control: On account of the Parliamentary control difficulties come in the way of day-to-day administration. This is ex cessively because questions are repeatedly asked in the parliament about the working of the undertaking. (c) Lack of passkey Expertise: The administrative officers who manage the personal business of the departmental undertakings do not more often than not have the business experience as well as expertise. Hence, these undertakings are not managed in a professional agency and suffer from deficiency leading to high-spirited drainage of public funds. d) Lack of tractability: Flexibility is necessary for a fortunate business so that the demand of the ever-ever-changing times may be fulfilled. alone departmental undertakings wishing flexibility because its policies cannot be changed instantly. (e) Inefficient Functioning: Such organizations suffer from in dexterity on account of incompetent lag and escape of adequate incentives to improve faculty of the employees. statutory CORPORATIONS The Statutory Corporation (or Public Corporation) refers to such organizations which are i ncorporated under the special Acts of the Parliament/State legislative Assemblies.Its circumspection pattern, its powers and functions, the area of activity, rules and regulations for its employees and its relationship with government departments, etc. are specified in the concerned Act. Examples of statutory corporations are State Bank of India, Life Insurance Corporation of India, Industrial Finance Corporation of India, etc. It may be noted that more than one corporation can also be established under the same(p) Act. State Electricity plug-ins and State monetary Corporation fall in this category. FEATURES OF STATUTORY CORPORATIONSThe main features of Statutory Corporations are as follows: (a) It is incorporated under a special Act of Parliament or State Legislative Assembly. (b) It is an autonomous body and is give up from government control in approve of its internal precaution. However, it is accountable to parliament and state legislature. (c) It has a separate legal exi stence. Its capital is wholly provided by the government. (d) It is managed by jury of Directors, which is composed of individuals who are trained and experience in business care. The members of the board of Directors are nominated by the government. e) It is supposed to be self-sufficient in financial matters. However, in case of necessity it may take loan and/or seek assistance from the government. (f) The employees of these enterprises are recruited as per their own sine qua non by following the terms and conditions of enlisting decided by the Board. MERITS OF STATUTORY CORPORATIONS Statutory Corporation as a form of organization for public enterprises has certain prefers that can be summarized as follows: (a) Expert Management: It has the advantages of both the departmental and private undertakings.These enterprises are run on business principles under the guidance of expert and experienced Directors. (b) inbred Autonomy: Government has no direct intercession in the day-t o-day management of these corporations. Decisions can be taken right wing away without any hindrance. (c) Responsible to Parliament: Statutory organizations are responsible to Parliament. Their activities are watched by the press and the public. As such they have to maintain a high level of force and accountability. (d) Flexibility: As these are independent in matters of management and finance, they enjoy adequate flexibility in their operation.This helps in ensuring good performance and operational results. (e) onward motion of National Interests: Statutory Corporations protect and gain national interests. The government is authorized to give policy directions to the statutory corporations under the provisions of the Acts governing them. (f) Easy to Raise Funds: Being government owned statutory bodies, they can easily get the required funds by issuing bonds etc. LIMITATIONS OF STATUTORY CORPORATIONS Having studied the merits of statutory corporations we may now look to its limi tations also.The following limitations are observed in statutory corporations. (a) Government Interference: It is true that the greatest advantage of statutory corporation is its independence and flexibility, but it is found only on paper. In reality, there is excessive government interference in virtually of the matters. (b) Rigidity: The amendments to their activities and rights can be made only by the Parliament. This results in several impediments in business of the corporations to respond to the changing conditions and take dauntless decisions. c) Ignoring Commercial Approach: The statutory corporations ordinarily face little ambition and wishing motivation for good performance. Hence, they suffer from ignorance of commercial principles in managing their affairs. MERITS OF GOVERNMENT COMPANIES The merits of government company form of organizing a public enterprise are as follows: (a) Simple routine of Establishment: A government company, as compared to other public enterp rises, can be easily create as there is no need to get a bill passed by the parliament or state legislature.It can be formed simply by following the mathematical operation laid down by the Companies Act. (b) expeditious Working on Business Lines: The government company can be run on business principles. It is fully independent in financial and administrative matters. Its Board of Directors commonly consists of some professionals and independent persons of repute. (c) competent Management: As the Annual advertise of the government company is placed in the lead both the house of Parliament for discussion, its management is cautious in carrying out its activities and ensures efficiency in managing the business. d) Healthy Competition: These companies usually offer a healthy competition to private sector and thus, ensure availableness of goods and services at reasonable prices without compromising on the quality. LIMITATIONS OF GOVERNMENT COMPANIES The government companies suffe r from the following limitations: (a) Lack of Initiative: The management of government companies always have the panic of public accountability. As a result, they lack initiative in taking right decisions at the right time.Moreover, some directors may not take real interest in business for fear of public criticism. (b) Lack of Business Experience: In practice, the management of these companies is generally put into the reach of administrative service officers who often lack experience in managing the business organisation on professional lines. So, in most cases, they fail to achieve the required efficiency levels. (c) Change in Policies and Management: The policies and management of these companies generally keep on changing with the change of government.Frequent change of rules, policies and procedures leads to an unhealthy agency of the business enterprises. IMPORTANCE OF PUBLIC empyrean ENTERPRISES § Balanced Regional Development § ascension the basic industries of an economy. § Concentrate on public welfare activities. § Promote exports § Price control of essential goods § Limit the influence of private monopoly. § Ensure security of the country. § Minimize the economic inequalities.\r\n'